Oral Answers to Questions

WALES

The Secretary of State was asked—

Digital Inclusion

Hywel Williams: What steps he is taking to promote digital inclusion in rural areas in Wales.

Paul Murphy: As both Secretary of State and the Minister responsible for digital inclusion, I am working closely with the Assembly and the other devolved Administrations to develop a new digital equality action plan. It will address issues for those living in rural communities, and I hope that it will be published later this month.

Hywel Williams: People without access to broadband are as excluded and disadvantaged as their counterparts in the 1950s who scrambled around with candles and kerosene lamps while everyone else had power at the turn of a switch. I have taxed BT about the problem many times, for instance in a letter that I wrote on 28 April to which I have still not received any acknowledgement or reply. Has the Secretary of State, in both his roles, had any discussions with his counterparts in Scotland, where I understand that BT advertises broadband availability 13 km from the exchange, compared to 6 km in Wales? How can that be done in Scotland if it cannot be done in Wales?

Paul Murphy: I agree with the hon. Gentleman. I shall make a point of talking to my colleagues in the Scotland Office and, when appropriate, to the Scottish Executive as well.
	I take the hon. Gentleman's point about parts of Wales which are not yet up to speed with broadband, and I can tell him that the Welsh Assembly Government take that very seriously too. They have provided funds for the upgrading of some 35 telephone exchanges in Wales which the companies believed were not profitable, but which the Welsh Assembly Government considered important to ensuring that broadband reached every part of Wales, including rural areas. They have also introduced a registration system for those who cannot access broadband, and 1,500 people and firms have already contacted Cardiff. The fact that take-up of fixed-line telephones and broadband in rural areas in Wales is higher than it is in urban areas demonstrates that there is a call for it.

Stephen Crabb: Hundreds of people in Pembrokeshire have found that they cannot access broadband because of antiquated line-sharing devices, even when the local exchange is enabled. BT cannot tell me how many other households are affected by the problem, and seems to have no strategic plan for upgrading the infrastructure. Does the Secretary of State think that the tens of millions of pounds of public money that BT has received to roll out broadband in rural areas is money well spent?

Paul Murphy: I think that BT is spending the money properly in Wales, but I take the hon. Gentleman's point, particularly in the context of my first answer. I shall be meeting BT next week to discuss these issues, and I shall make a particular point of mentioning Pembrokeshire. Later this year the Assembly Government will undertake a tendering process to choose a supplier to provide broadband infrastructure and services in what are known as "not spots" in Wales, and they expect the contract to be awarded next year. This is an important issue, and I will take it up.

Mark Williams: When the Secretary of State meets BT next week, will he mention not only Pembrokeshire but Ceredigion? I am sure he will endorse the work of Ceredigion county council, which carried out a survey of "not spots" to identify the gaps in the system, but will he also endorse the comments of the Mid Wales Partnership about the need for "urgent planning and investment" to improve high-speed internet connections? I am particularly interested in the business case: a number of small businesses feel that they are being impeded by the lack of action to deal with the problem.

Paul Murphy: The hon. Gentleman is right. I take account of the fact that, in rural Wales particularly, many people work at home and need their computers. They need to be online, and in a position in which they can benefit from the new technology, for their businesses to work. When I meet BT, I shall be sure to discuss the problems of Ceredigion as well as those of the other counties in Wales.

Drugs (Prisons)

Henry Bellingham: When he next expects to meet the Secretary of State for Justice to discuss drug abuse in prisons in Wales.

Huw Irranca-Davies: My right hon. Friend the Secretary of State and I regularly meet ministerial colleagues and others to discuss a variety of issues, including prisons. The Prison Service drug strategy introduced in 1998 has had a positive impact on drug use in prisons. The number of positive drug tests continues to fall, while the number of successfully completed treatments continues to rise.

Henry Bellingham: Why are young criminals going into Welsh prisons as mild drug users and coming out as hardened addicts who then reoffend to feed their habits? Other countries, such as the United States, Sweden and Germany, are making substantial progress in ridding their prisons of drugs. Why can we not do the same here, and why cannot Welsh and Justice Ministers get a grip and take the matter seriously?

Huw Irranca-Davies: People tend to read and listen to some of the more salacious stories of drug use in prisons. The hon. Gentleman has raised an important point, but let me emphasise again that we are actually succeeding. The bare facts are that 8.6 per cent. of mandatory drug tests yielded positive results in 2006-07 compared with 20 per cent. 10 years ago, and positive testing for use of opiates has fallen by more than 25 per cent. in the past 10 years. I realise that tabloidese headlines make cases of drug use into huge stories, but the actual trends and evidence show that the drug programmes in our prisons are working.

Paul Flynn: How can it possibly make sense to reclassify cannabis and increase the sentence for cannabis users from two years to five years when not a single prison in the country is free of the open use of heroin and cocaine? Is it not true that we will be sending cannabis users into prison to be discharged as heroin addicts?

Huw Irranca-Davies: My hon. Friend has regularly raised these issues, but I hope he will also welcome the advances that have been made. More than 7,500 drug treatment programmes were completed in prisons in England and Wales in 2006-07, which is 1,500 over target. Although I know that my hon. Friend will continue to advocate his case very forcefully, the programme that we have in place in prisons is undoubtedly proving effective.

Elfyn Llwyd: I listened carefully to the Minister telling us the statistics on improvements, but that is not what the Prison Officers Association or the National Association of Probation Officers believe. A lifer recently asked to be taken from an open prison in Wales back into a closed prison because the temptation to go back on heroin was so great. There have been numerous similar examples in recent months of people requesting to go back into closed conditions because of the ready availability of heroin. I realise that it is a big problem, but, frankly, a bit more effort needs to be put in.

Huw Irranca-Davies: This is an important point. Constant attention, constant resourcing and focus are required to turn the situation around. The hon. Gentleman makes a valid point that we must keep up the effort and keep pushing harder. That is true, and hon. Members who have raised that point are pushing at a genuine issue, but we are going in the right direction. We will always have to do more, and when there are instances such as those the hon. Gentleman reports, we must work to address them, but we are pushing in the right direction—and, I must say, doing so for the first time in many years and after decades of underspending in prisons.

Madeleine Moon: Parc prison in my constituency has effective medical and psychological support for those who are struggling to cope with their drug addiction, but does my hon. Friend agree that social support is also vital to tackling the issue—to make contact with and enable good visits from their families, and to help people to learn to play and read with their children?

Huw Irranca-Davies: My hon. Friend is absolutely right to highlight that there is not a single line of attack on this issue. She is a supporter of, and a regular attender at, Her Majesty's prison Parc, with the Parc Supporting Families group, which does excellent work. Parc prison has consistently low results in random drug testing: prisoner drug abuse levels average below 6.5 per cent. as against the target of more than 15 per cent. Therefore, I welcome the work going on, particularly within the wider ambit of support for families and for resettlement, and I pay tribute to the work of my hon. Friend and others in supporting that.

Cheryl Gillan: The Minister is painting a rosy picture. Over the past three years, despite a 30 per cent. increase in prison drug cases reported to the police, the proportion of prosecutions for drug offences in prison has dropped from 24 per cent. to 18 per cent. of all reported cases. How many drug offenders in Welsh prisons have been prosecuted over the past three years, and when will this Government truly use the legislation to clean up our prisons and end this drug culture on the inside?

Huw Irranca-Davies: Again, I say to the hon. Lady, who speaks from the Conservative Front Bench, that this is a genuine issue that we are all struggling to grasp. We want offenders who enter prison to come out having turned their habit around so that they can be resettled, and the trends are going in the right direction. I hope she will welcome the funding for drug treatment in prisons, which has doubled from £12.7 million to £24 million in 2008-09, and will further increase to £39 million in 2009-10, and to £43 million in 2010-11. Not only are the trends going in the right direction, but we are putting our money where our mouth is to make sure that that is right for prisoners.

Dee Estuary

Ben Chapman: What recent discussions he has had with the First Minister on the environmental status of the Dee Estuary; and if he will make a statement.

Paul Murphy: I have regular discussions with the First Minister on a range of issues, including marine and environmental matters. The Dee estuary is of huge importance to wildlife and the environment, and I welcome its bid to become a special area of conservation site.

Ben Chapman: May I tell my right hon. Friend how much I welcome the Dee Estuary Cockle Fishery Order 2008, which came into force yesterday? It has the potential to provide a safe and sustainable fishing environment, as opposed to the over-exploited and unsafe one that existed before. As he has said, the Dee will continue to be a vastly important site that requires a balance between ecology and economy. Will he assure me that that balance will continue to be struck and that he will monitor the estuary to ensure that, not least in relation to dredging?

Paul Murphy: I too welcome the Dee Estuary Cockle Fishery Order 2008. Coming into force in July, it will ensure that we have a sustainable and safe fishery in the estuary. My hon. Friend first asked me a question on this issue on 27 June 2001, and I am glad to say that at last we are reaching the point at which the Dee estuary will become a special area of conservation. That will boost the local economy as well as protecting local wildlife, and I look forward to answering more questions from my hon. Friend on this very important issue.

Lembit �pik: In the same context, what assessment has the Secretary of State made of the Marches estuary and the proposed fresh-water lake for periods of potential flooding in the Llandrinio area? Is he not aware of the damaging environmental consequences of the Environment Agency's proposals to flood a part of my constituency, as opposed to the positive comments he was able to make about the Dee estuary? Will he look into the overwhelming objections of my constituents to being involuntarily flooded out for the sake of flood mitigation downstream?

Paul Murphy: It is a long way from the Dee estuary and cockles, but I am happy to meet the hon. Gentleman to discuss the issue that he raises, as I know that it is very important to his constituents.

Hospital Waiting Times

Michael Fabricant: What discussions he has had with Welsh Assembly Government Ministers on trends in waiting times for residents in mid-Wales referred to hospitals in England for operations; and if he will make a statement.

Huw Irranca-Davies: I have regular discussions with Welsh Assembly Ministers and the Department of Health to discuss the important issue of the delivery of health services between England and Wales. Indeed, only last month the First Minister of Wales gave evidence on cross-border services to the Select Committee on Welsh Affairs.

Michael Fabricant: Does the Minister accept that there is a real problem for patients in mid-Wales who need to go to hospital in England, especially to the hospital in Oswestry? I know of a lady who lives near Llanegryn in the Dysinni valley, not far from Tywyn. Four years ago she developed a crumbling hip, but she had to waitas her doctor saiduntil it became agony before she could be referred to hospital. Now, 32 weeks later, she is still waiting for a hospital appointment, and she is not alone. What steps can the Minister take to prevent that from being repeated elsewhere?

Mr. Speaker: Order. Long supplementaries are unfair to other hon. Members.

Huw Irranca-Davies: It is important that the concerns of constituents, from whichever constituency, are raised in the House and through their MPs, but the hon. Gentleman is right to raise the important issue of cross-border treatment of in-patients and out-patients. Progress is being made. We have to deal with the individual instances and drive down waiting times. On both sides of the border, waiting times continue to fall significantly. In May 2006, 768 Welsh residents were waiting more than 22 weeks for in-patient treatment, but in May 2008, only one person had waited for that long. For out-patients, in May 2006, 940 Welsh residents were waiting for more than 22 weeks, but zero patients were waiting in May 2008. We are making progress, but individual cases need to be taken up so that patients do not have to wait for a long time.

Betty Williams: In respect of health services in mid-Wales and elsewhere, would my hon. Friend care to comment on the announcement today of 100 million of additional funding for health services in hospitals and for palliative care? What effect will that have on patients from mid-Wales and the rest of Wales? Does he agree that that is an excellent example of good practice by the Welsh Assembly Government as we celebrate 60 years of our NHS?

Huw Irranca-Davies: Indeed; the NHS was of course the brainchild not only of a great individual in Wales, Nye Bevan, but of great people who came together with the founding principles of a health service that was free at the point of delivery and available for everybody. Today's announcement of 100 million of funding for improvements to hospitals and palliative care is wonderful news for mid-Wales and elsewhere. That funding includes 12 million for the development of a north Wales cancer centre, 23.5 million to develop mental health facilities in north Wales and 66 million for a new hospital in Mountain Ash. We on the Labour Benches are convinced that not only was the NHS undoubtedly one of the biggest significant issues of the post-war Labour Government but it will continue to be maintained and to prosper under a Labour Government, both here and in the Welsh Assembly Government.

Roger Williams: When Welsh patients compare their experiences with those of their English neighbours, they know that they are second-class patients because of the extra time that they have to wait for procedures. Will the Minister tell me when Welsh patients will have equal treatment to English patients?

Huw Irranca-Davies: The hon. Gentleman is absolutely right to say that the patient outcome should be excellent on both sides of the border. We can look at the innovations that the Welsh Assembly Government have made in primary care, too. In many things, they are leading the way. We do not have a divided health service. Under devolution, we have two Administrations working hard to deliver the founding principles of the NHS. We will continue to do so. That is why we are seeing waiting times falling in England and in Wales. That is why we are seeing continued investment in health in England and in Wales. That is why we are seeing the refurbishment of accident and emergency units and new-build hospitals in England and in Wales. The future of the NHS is safe in Labour's hands.

Albert Owen: The Minister is right to mention the cross-border inquiry, in which the Select Committee on Welsh Affairs is involved. Part of the evidence that we have received shows that there is a concordat between the Welsh Assembly Government and the Department of Health. Does he agree that that needs to be strengthened further to include local health bodies on both sides of the border? Finally, does the Minister agree that it is important that the hon. Member for Lichfield (Michael Fabricant) and I can debate Welsh and English matters in the House of Commons and that any Tory proposals for English-only would debar us from doing that?

Huw Irranca-Davies: My hon. Friend raises two important points. I am pleased to say to him and to the House that the cross-border protocols that the Welsh Affairs Committee had been considering are subject to constructive engagement between Welsh Assembly Government officials and Whitehall officials. We hope for rapid progress and we hope to deliver something that will benefit patient outcomes by April next year. Those measures will be in place. On the issue of Welsh MPs' being able to speak on health issues, my hon. Friend is absolutely right. We cannot have a two-tier system whereby Welsh MPs are precluded from speaking on issues that people bring to their constituency offices. We will ensure that that does not happen.

David Jones: The Minister says that there is no divided health service, but he will be aware that Hereford Hospitals NHS Trust is now refusing to operate differential waiting lists between English and Welsh commissioners, so Powys local health board is obliged to employ a consultant to advise it on who should be treated first. That consultant happens to be based in Hereford hospital. Does not the Minister agree that that is a ludicrous state of affairs? Will he press the Welsh Assembly Government to ensure that patients from mid-Wales are treated at their local hospital, Hereford, on exactly the same basis as patients from England?

Huw Irranca-Davies: The hon. Gentleman raises an important point about trusts' engagement across the border and cross-border protocols. We must undoubtedly get that right, because we want patients on both sides of Offa's dyke to have good health outcomes. He asks whether we will continue to engage with the Welsh Assembly Government and UK Health Ministers on the matter. Yes, we will. The Wales Office has a pivotal role in that, because we want the same thing: Welsh patients and English patients having good health outcomes and not being tied up in any disagreements through cross-border issues.

Cardiff Airport

Ann Clwyd: What recent discussions he has had with the Welsh Assembly Government on increasing the number of international routes flown from Cardiff International Airport.

Paul Murphy: I have regular discussions with Welsh Assembly Government Ministers concerning all matters affecting Wales, including air transport.

Ann Clwyd: As everyone is agreed that there is over-centralisation of air transport in the UK, why are 70 per cent. of air travellers in Wales still forced to go outside the country to get to their destination? Surely it is time that services from Cardiff airport were able to fly to more destinations in the world.

Paul Murphy: Yes, I accept my right hon. Friend's point. She will know, of course, that from Cardiff one can go directly to 61 destinations, from Alicante to Warsaw. However, she is right that the business community in Wales in particular would like more direct flights, for example to Germany and Belgium. Cardiff International airport is working on that together with the Welsh Assembly Government.

David Davies: Does the Secretary of State not find it extraordinary that in spite of all the concerns about climate change, internal flights in Wales are being subsidised by Welsh taxpayers? Does he not agree that any flights are good, but only if the market rates support them?

Paul Murphy: I think that the hon. Gentleman will accept that there is a need for a north-south air link, and that the Assembly is spending taxpayers' money well by ensuring that there is a proper link by air between the north and south of Wales. He knows how long it takes to get by road or rail from Anglesey to Cardiff. I think that it is good money well spent.

Cheryl Gillan: The Secretary of State and I agree that Cardiff airport is crucial to the Welsh economy and that we need to secure its future. Does he agree that any road charges that might be introduced in Wales and not in England under the provisions of the Local Transport Bill, if they are on roads linking to the airport, would give it a serious competitive disadvantage against, say, Bristol airport? Is that not another reason why the Welsh provision put in the Bill at Plaid's request should be dropped forthwith?

Paul Murphy: I do not know of any plans to charge for roads going to the airport in Cardiff, but I understand what the hon. Lady says, and it is important to have good road links between the airport and the rest of south Wales.

Sporting Events

Ian Lucas: What discussions he has had with the First Minister on holding national and international sporting events in Wales; and if he will make a statement.

Huw Irranca-Davies: My right hon. Friend the Secretary of State and I have regular meetings with the First Minister and other Welsh Assembly Government Ministers to discuss matters affecting Wales, including sporting events. The House will know that Wales now has an international reputation as a nation capable of winning and hosting successful major sporting eventsa reputation that we hope to enhance still further.

Ian Lucas: My hon. Friend will be aware of the great enthusiasm in Wales to host the 2016 European football championships in collaboration with Scotland. Will he have a word with some of his Scottish colleagues in government to encourage them to speak to the Scottish Football Association about the joint hosting of the European championships, to mirror the success of the tournament that we have just seen?

Huw Irranca-Davies: My hon. Friend and his Assembly counterpart Lesley Griffiths are championing the cause of the tie-up between Wales and Scotland to host the 2016 European championships. I will be more than happy to discuss it with Scottish counterparts. As he knows, Wrexham now has a reputation for hosting international football matches at the Racecourse Ground. Only last month, it held rugby matches in the International Rugby Board junior world championships.

Jennifer Willott: Clearly, one of the most important international sporting events coming up is the Olympics. I am sure that the Minister is aware that just two of the more than 600 contracts that have already been awarded for the Olympics were awarded to Welsh companies. That undermines the Government's pledge that the wealth from the Olympics would be shared fairly across the UK. Will he meet the Minister for the Olympics to try to ensure that Wales gets its fair share of the remaining 4 billion-worth of contracts that will be coming up?

Huw Irranca-Davies: I will indeed. In fact, my right hon. Friend the Secretary of State and I meet my right hon. Friends the Minister for the Olympics and the Secretary of State for Culture, Media and Sport to stress Wales' commercial importance for the Olympics. All Welsh Members have a role to play in encouraging business to come forward. The Olympic Delivery Authority expected to deliver 2,000 contracts before the games, and we should all encourage Welsh businesses to tender for them.

PRIME MINISTER

The Prime Minister was asked

Afghanistan

Jeremy Corbyn: When he expects all British troops to be withdrawn from Afghanistan.

Gordon Brown: I am sure that the whole House will first wish to join me in sending our profound condolences to the families and friends of Warrant Officer 2nd Class Dan Shirley of 13th Air Assault Support Regiment, Royal Logistics Corps, and of Lance Corporal James Johnson of 5th Battalion, the Royal Regiment of Scotland, who have given their lives in Afghanistan in the past week. We owe them, and all those who have served, an immense debt of gratitude.
	Afghanistan is the front line against the Taliban. Forty nations under a UN mandate are contributing more than 50,000 troops. More than 6 million children are now in school, and there has been a 25 per cent. fall in infant mortality. We will not set an artificial timetable but, as the capability of the Afghan national security forces improves, Afghan forces will take over more and more responsibility for their own affairs.

Jeremy Corbyn: I join the Prime Minister in expressing condolences to the families of those soldiers who perished recently, and of the more than 100 others who have died during the British presence in Afghanistan. Is he aware that more than 2,000 Afghan people have died this year alone, and that this year the war will cost the British taxpayer 1.6 billion? Does he not think that there is a need for a re-examination of our strategy in Afghanistan? We have been there seven years, but the poppy crop is at record levels. Would it not be better to start buying the poppy crop so that it can be used for medicinal purposes and not for the drug trade, and in order to undermine the basis of the instability in the country? Should we not also set a timetable for the political dialogue that will ensure that we can withdraw British troops as soon as possible?

Gordon Brown: Responsibility for the violence and death lies with the Taliban and their supporters. Over the past few years, we have trained 58,000 soldiers in the Afghan army, and the police are now training 80,000 Afghan local police. As their capability improves, not only will we allow Afghan forces to take more control over their own country but local and national Government will also be more secure and the economic and social development programmes that we are engaged in will happen too. We have doubled the number of poppy-free provinces in the last period of time. We are continuing to fight the war against heroin as well, but I assure my hon. Friend that the reason that we are in Afghanistan is to stop the Taliban taking over there and to stop al-Qaeda coming back in that country. Our aim is to remove the threat to the Afghan people and the whole of Europe, including our own country.

Bob Russell: I join the Prime Minister in the expression of condolences, and endorse all his comments on why British troops must remain in Afghanistan for the foreseeable future. On Monday, I attended the funeral in my constituency of Lance Corporal James Bateman. He did not die in vain, and nor did any of the other seven members of 16 Air Assault Brigade who have lost their lives in Helmand province over the past month.
	The Prime Minister has referred to the 43 nations that are in Afghanistan. Will he confirm, however, that the number of European NATO countries in southern Afghanistan can be counted on the fingers of one hand? Is it not time that our European allies did more to send their troops to the front line, and that they stopped relying on Britain to take the brunt?

Gordon Brown: I join the hon. Gentleman in paying tribute to his constituent, who died serving the country in a noble cause. As for the progress being made in Afghanistan, I can only report what Sir Jock Stirrup, the Chief of the Defence Staff, said only this morning. He said that
	the progress we've made over the last few months is remarkable.
	Speaking about Helmand province, he said:
	The last time I was here, I wasn't able to come into the town at all. It was a full-scale battlefield...Now we've just come twice through the main street.
	That is a sign that things are improving as a result of the presence of British troops. I agree with the hon. Gentleman, too, that every country that has signed up to the coalition forces should make a contribution, and that in some cases that contribution should be bigger than the one being made at the moment. We have asked for the supply of forces and equipment. The hon. Gentleman will know that the French have agreed to put extra forces in Afghanistan, and they will allow the American marines to move south into Helmand province. At the same time, the Germans are offering support in policing, which will allow us to increase dramatically the number of police who are being trained in Afghanistan. As for helicopters, we have asked all European countries with helicopters to make them available for the difficult terrain in Afghanistan. But I agree with the hon. Gentleman that, as we said at the NATO meeting in Bucharest, all the countries that have signed up to this venture should make their fullest possible contribution.

Engagements

Chris Bryant: If he will list his official engagements for Wednesday 7 July.

Gordon Brown: I will have meetings with Ministers later today.

Chris Bryant: Robert Mugabe is a corrupt and brutal thug, who just goes to prove that someone can put their hand on the Bible and swear an oath, smile and smile and still be a complete and utter villain. Is it not the case, however, that the United Nations has been far too slow and reluctant to adopt a robust attitude to Mugabe? Is it not time that it was pointed out very clearly to him that he is no more the fairly elected President of Zimbabwe than Pinochet was of Chile?

Gordon Brown: I talked to the Secretary-General of the United Nations only this morning about what I believe are the responsibilities of the United Nations in this area. Given that the only credible election that has taken place was the one in which the Movement for Democratic Change actually recorded a victory, and given that the second round was a travesty at the hands of what is a blood-stained regime, I am pleased that, yesterday, the African Union called for an end to violence, set up a system of mediation and talked about a transitional Government in Zimbabwe. Having talked to the UN Secretary-General this morning, I think that it is right that the UN send an envoy to Zimbabwe. In the absence of real change, we will step up our sanctions and ask other countries to do so. We will press for tough action on Zimbabwe at the Security Council later today, and we will do so at the G8 in coming days. There will not be support for reconstruction in Zimbabwe until democracy is restored.

David Cameron: I agree with every word that the Prime Minister has just said about Zimbabwe: the clearest possible message should go out that we do not recognise the illegitimate presidency of Robert Mugabe.
	May I join the Prime Minister in paying tribute to Lance Corporal James Johnson and Warrant Officer 2nd Class Dan Shirley, who were killed in Afghanistan? Their fight in Afghanistan is not just about the stability of that country, but, as the Prime Minister has said, about keeping our streets safe here in Britain.
	Will the Prime Minister confirm what he said on the 42 days vote: that no deals were made, no jobs were offered and no rewards were promised?

Gordon Brown: Yes.

David Cameron: I am grateful for the very short and very clear answer. Perhaps the Prime Minister can explain why, this morning, a letter has been published by  The Daily Telegraph from the Labour Chief Whip to the right hon. Member for Leicester, East (Keith Vaz) that says:
	Thank you for all your help during the period leading up to last Wednesday's votes. I wanted you to know how much I appreciated all of your help. I trust that it will be appropriately rewarded!
	Can the Prime Minister tell us what the Chief Whip meant by appropriately rewarded?

Gordon Brown: We thanked the Chairman of the Home Affairs Committee for doing exactly the right thing: for voting in the spirit of the report of the Home Affairs Committee and voting with the Government. As for the allegations being made about the Ulster Unionists and the Democratic Unionist party, I think that the right hon. Gentleman should listen to what they say about terrorism; they know more about it than almost anyone in the House.

David Cameron: Have we not, once again, seen the Prime Minister's utter inability to be straight with people? Why cannot he give a straight answer to a straight question? The Chief Whip [ Interruption. ]

Mr. Speaker: Order.

David Cameron: The Chief Whip, who should be wriggling with embarrassment, wrote to the Chairman of the Select Committee on Home Affairsthe job of the right hon. Member for Leicester, Eastand said:
	I trust that
	you
	will be appropriately rewarded!
	So let me ask the Prime Minister again: do not take people for fools; tell us the truthwhat did he mean?

Gordon Brown: He meant that he was thanking the Chairman of the Home Affairs Committee for doing exactly the right thing, and if the right hon. Gentleman has any allegation to make

Mr. Speaker: Order.

Tom Levitt: Will my right hon. Friend congratulate the people of New Mills in my constituency, who later this month will have the first community-owned 80 MW hydroelectric power station up and running in New Mills? Will he therefore look at the support that the Government give for small-scale community power stations and encourage green energy at a community level?

Gordon Brown: I am grateful to my hon. Friend. We support the hydroelectric power station that has been created in his constituency, and he will have seen last week the paper that was produced on renewables, showing that we had to increase our contribution to 15 per cent. That will be done by wind, wave and solar power, but it will also be done by hydroelectric power.

Nicholas Clegg: May I add my own expressions of sympathy and condolence to the family and friends of Lance Corporal James Johnson and Warrant Officer Dan Shirley, who tragically lost their lives in Afghanistan this week?
	The Prime Minister this week published yet another Government review of the national health service, but what does it say about him and his Government that, after 11 years, one in a quarter of all British people now face mental health problems; that, every single day, more than 1,700 children are prescribed anti-depression drugs; and that millions of mental health patientssome of the most vulnerable people in the NHSstill have to wait three years to get help? Does the right hon. Gentleman agree that we now have a two-tier health system in which millions of mental health patients are being left behind?

Gordon Brown: Let me just say that we have increased spending on mental health by 31 per cent. in real terms in the past 10 years. There are now 60 per cent. more consultant psychiatrists working in the national health service, and there are 20 per cent. more mental health nurses. That is possible only because of the investment that we have made in the national health service, which is far beyond what any other party offered or promised at any election, and that is why there are 80,000 more nurses, that is why we are doing 1 million operations, and that is why today, this party, and I believe the whole House, should be proud of 60 years of success in the national health service. I am proud that a Labour Government created it, and I hope that it will have the support of all parties in this House.

Nicholas Clegg: The right hon. Gentleman is doing it again: he is confusing a list with an answer, and a review with action. There is a mental health crisis in this country today. Even the new president of the Royal College of Psychiatrists himself said this week that our mental health wards are unacceptable, uninhabitable, and dangerous. There is no excuse for the Prime Minister's complacency. He once again relies on a promise made in a review, but when will he act to introduce a maximum waiting time and equal rights for all mental health patients?

Gordon Brown: The right hon. Gentleman forgets that one of the purposes of our policy is that fewer people are in hospital and more care is provided in the community, but I can tell him that real investment in adult mental health places has increased by 1.2 billion, that we spent more than 5.1 billion on adult mental health services last year, compared with only 3 billion in 2001, and that capital spending on mental health hospitals and on hospital accommodation has been rising. Yes, we want to do more, but we can do more only if we invest more in the national health service as a whole. That is our commitment; it is not clear whether it is the commitment of all parties in this House.

Shona McIsaac: My attention has been drawn to an NHS leaflet that sets out bold plans to launch GP-led health centres, where many services can be located under one roofas well as other services, such as diagnosticswithout destroying the GP-patient relationship. Given that the leaflet was distributed in 1948 at the launch of the NHS, will my right hon. Friend reaffirm his commitment to that founding principle of the NHSunlike the Opposition, who opposed the proposals in 1948 and continue to do so now?

Gordon Brown: There are 5,000 more general practitioners than in 1997. More and more general practitioners are able to undertake diagnostic and other services in their own practices, and that will continue with more power to GPs in the years to come. My hon. Friend will also be pleased to know that although this time last year there were fewer than 2,000 matrons in the national health service, today we can report that there are 5,500. That is more than a doubling of the number of matrons, and they have greater control over the cleanliness of hospitals now. So, we are giving matrons, nurses and GPs more power in the national health service, and while the Opposition smirk at that the fact of the matter is that we voted for the national health service and they opposed it.

David Cameron: A year ago, I asked the Prime Minister why, under his new early release from prison scheme, dangerous criminals were being let out early against the express advice of probation officers. The Prime Minister promised me that it would be looked into, but it is still going on. One person released early under this scheme returned home and stabbed his girlfriend. He said:
	I cannot believe they let me out. I told them I would do it.
	Why has the Prime Minister not stopped this happening?

Gordon Brown: Less than 1 per cent. of prisoners who have been released within 18 days of the due date of their release have been guilty of any further crimes. It is bad when any instance happens, but the right hon. Gentleman has to accept that we are talking about a very low proportion of those who have been released. We have also instructed prisons that they should now ensure that the police are notified in response to any information that they have received that a prisoner poses a risk of domestic violence. So since the incident that he is talking up, we have stepped up our checks, and these will continue to ensure that people are not released if they pose a risk of domestic violence.

David Cameron: But I warned the Prime Minister about this a year ago, and the fact is that nothing was done. The head of the probation officers said on the radio:
	Well, we brought it up last year and as far as I could see they've done nothing.
	Does the Prime Minister not realise how serious this is? Probation officers said this week that there are at least 29 cases, and in every one probation staff took the view that the men were not suitable for release. On the issue of domestic violence, which he raises, in eight cases men convicted of domestic violence who were released early went back and beat up their wives or partners. How could that possibly be allowed to happen a year after the Prime Minister said that he would stop it?

Gordon Brown: I have just explained how we have stepped up the checks in response to the National Association of Probation Officers. I have to say to the right hon. Gentleman that we are increasing the number of prison places. It has increased from 60,000 to 80,000 during the period of this Government. It is going up to over 82,000 this year and will rise again to 86,000. The idea that we are not taking action to deal with the bigger problem of the provision of prison places is wrong. We are taking the action that is necessary.
	I have to remind the right hon. Gentleman that during the past 10 years there are 16,000 more police on the street, we have more community support officers and at the same time crime is down by 30 per cent. It would have helped if the Opposition had voted for some of our measures. The Opposition voted against our measures on gun crimeto five years for holding a gun. They voted against our measures on DNA. They voted against measures on antisocial behaviour in the period when he was trying to hug hoodies.

David Cameron: No one will ever forget that the right hon. Gentleman was the Chancellor of the Exchequer who did not build the prisons and landed us in this mess. It is absolutely no consolation to the victims of domestic violence that he reads out that list of completely irrelevant figures. He says that they are stepping up the checks, but will he confirm that there are no proper accommodation checks about where these people are going back to and that there are no proper risk assessments? Is it not the case that under his new early release scheme, people are released even though probation officers do not know where they are going and have not assessed them for risk? They end up committing further crimes. A year ago, the Prime Minister told me in this House that he would act. Surely people will conclude that he has failed in his basic duty, which is keeping people safe.

Gordon Brown: The right hon. Gentleman is quite wrong. Over the past 10 years we have increased the number of prison places from 60,000 to 80,000. That was a decision that we made because we ran an economy that could deliver the resources to build the prison places. As for his questions about individual prisoners being released, any prisoner serving over 12 months who is released is subject to probation. As far as concerns about domestic violence are concerned, I have already told him that prisons have been instructed that they should now ensure that the police are notified in response to any information that they receive about a prisoner who may pose a risk of domestic violence.
	So we have stepped up our checks. But the right hon. Gentleman has not answered the point that I made. We have acted against antisocial behaviour, we have acted against domestic violence, we have acted so that evidence can be constructed through DNA and we have brought in CCTV. Most of those proposals have been opposed by the Opposition. They talk tough on law and order and act soft. They talk tough on terrorism and act soft. They talk tough about the planning laws, and last week voted against them. On all the major issues, when difficult, long-term decisions are made, they duck the big issues.

Alan Simpson: Everyone in Britain is affected by rising energy prices, but none more so than those in the 4 million households living in fuel poverty. As a result of the 2 per cent. increase in fuel duty that is scheduled to come into effect this October, the Government will receive in excess of 1 billion in tax revenue. Rather than cancelling the increase as a sweetener for lorry drivers, will the Prime Minister commit that 1 billion to meeting the 2010 targets to take all vulnerable households out of fuel poverty?

Gordon Brown: We are committed to helping those in fuel poverty. That is why we have raised the winter allowance. That is why 3 million households are benefiting from insulation schemes. That is why we have signed agreements with the utility companies to give more money to the lowest-income households, so that their fuel bills can be reduced. We will step up our insulation programme, our draught-proofing programme, and our programme for greater fuel efficiency in homes in the next few months. I have to caution my hon. Friend against the idea that if there is a downturn and oil prices go up, all the benefits go the Treasury. What actually happens is that people spend less, so VAT receipts are less; fewer people are earning, so income tax receipts are less; and less profit is made by most companies, so profits tax is less. He has to take into account the fact that during a period of world downturn, revenues are not uprevenues are down.

Stephen Crabb: What is worse: coming behind the British National party in Henley, or coming behind the Scottish National party in Glasgow, East? Will the Prime Minister make the trip up to Glasgow to try to prevent that from happening?

Gordon Brown: The hon. Gentleman had the chance to ask about any issue. This morning, one might have thought that Conservative Membersif not those on the Front Bench, then those on the Back Bencheswould have acknowledged 60 years of the NHS. Once again, they have resorted to trivia when they could have asked sensible and serious questions.

Gordon Banks: With the attack in Jerusalem and the reported violence on the Egyptian border today, peace in the middle east is vital, not only for that region, but for the world. Will my right hon. Friend take this opportunity to tell the House what more he can do to make sure that extremism does not derail the long-term plan for peace in the region?

Gordon Brown: I am grateful to my hon. Friend, who takes a very big interest in matters in the middle east. I am sorry to hear of reports today of yet another terrorist incident in Jerusalem. I hope that we will hear reports that the casualties are minimal. To help bring about more general peace in the middle east, we have been considering what we can do. We have today laid an order before Parliament extending proscription to cover Hezbollah's entire military wing, solely on the grounds of new evidence of its involvement in terrorism in Iraq and the occupied Palestinian territories. Proscription will not affect Hezbollah's legitimate political and social wings, but we continue to call on Hezbollah to end its status as an armed group, to participate in the Lebanese democratic process, and to do so on the same terms as other political parties.

Iain Duncan Smith: In his answer to his hon. Friend the Member for Rhondda (Chris Bryant), the Prime Minister seemed to welcome the African Union's outcome concerning Zimbabwe. Surely the real reading is that that outcome was a complete and utter sham. The reality is that President Mbeki's hand is now being seen in the process. Surely he is determined to maintain President Mugabe in his role. To do that, they will bully the MDC, try to divide it, and force it to form some sort of ludicrous union Government with President Mugabe. Surely the Government should get all the western Governments to say categorically to President Mbeki, It is time for you to get rid of this man, and if you don't, trade and aid to South Africa will come under review.

Gordon Brown: It is indeed time for Mugabe to step down, and he has blood on his hands after what happened during the election campaign, in which so many people died and were displaced. I think that the right hon. Gentleman should read into the African Union summit and its decisions, which I have before me, something more positive than what he is suggesting. The summit concludes that the African Union is
	Deeply concerned with the negative reports of SADC
	that is, the election observersand is
	concerned about...the loss of life
	and wants to avoid further worsening of violence. It has reported that it will have an envoy and mediation in Zimbabwe. The aim is to involve the MDC in the Government. I have asked the Secretary-General of the UN to send a UN envoy to Harare. I think that it is important to recognise that the African Union did take a step forward yesterday, but there is a lot more to do, and we should support the United Nations, through the Secretary-General, in its efforts to achieve mediation that could bring about a transition to a democratically elected Government in Zimbabwe.

Margaret Moran: Following my ten-minute Bill, may I congratulate the Government on taking action to ensure that more than 90 per cent. of domestic internet service providers block child abuse images? Is my right hon. Friend aware, however, that there are concerns that similar blocks must apply to local and central Government and to prisons? Will he agree to meet me and children's charities to ensure that all our children will be protected from this appalling abuse?

Gordon Brown: My hon. Friend has been a very vigorous campaigner on behalf of safety for children in using the internet, and it was in no small measure due to her efforts and proposals that we set up the review of internet security led by Dr. Tanya Byron. That review has proposed far greater checks on the internet to ensure security. My hon. Friend is right that we should be aware of what is happening in prisons and in local and national Government, as well as taking other measures. I will be very happy to meet her. We are setting up the internet security council in the next few weeks, and I look forward to meeting her and the children's charities that she mentions.

Angus Robertson: I am sure that the whole House wishes David Marshall a speedy recovery. The Recess Elections Act 1975 allows for parliamentary by-elections when Parliament is not in Session. Why, then, have the Labour Government moved for the quickest possible timetable for a by-election in Glasgow, East, corresponding with the Glasgow fair? Is not that simply down to the fact that the Prime Minister is scared of a bloody nose from the SNP?

Gordon Brown: I am sure that the hon. Gentleman would be complaining if we had waited to have the by-election. It is right that the constituents of this area of Glasgow have a new MP as soon as possible.

Mohammad Sarwar: My right hon. Friend the Prime Minister may be aware of my early-day motion condemning the Scottish Executive's decision to slash funding for Glasgow science centre from 1.7 million to 1.08 million, which threatens its financial viability. Glasgow science centre is a unique facility that attracts thousands of visitors and has been awarded five-star status by Visit Scotland. Does he share the anger of my constituents and the people of Scotland who use this unique facility and call on the Scottish Executive to reverse this short-sighted decision?

Gordon Brown: My hon. Friend is absolutely right. He is asking a question about what affects the Glasgow peoplethat is, a 40 per cent. cut in funding to Glasgow science centre as a result of a decision by the SNP Administration. We have doubled science expenditure in this country and we are encouraging young people to visit science centres. It is unfortunate that funding in Glasgow has been cut as a result of the SNP's decision, and it will live to regret that.

Peter Tapsell: Are we to understand that the right hon. Gentleman's bleak message to the country is that for many years to come, at Prime Minister's questions, he and his successors will pay mournful tribute to the gallant men and women who in the previous week have been killed in Afghanistan fighting an unwinnable and deeply unpopular war when it is widely understood that the Taliban are not international terrorists and that the international terrorists are now mostly trained in Pakistan, Iraq and Britain?

Gordon Brown: I invite the hon. Gentleman to join the Defence Secretary in a visit to Afghanistan to see it for himself. As a result of what has happened, the Taliban have been removed from power. Some 40 nations are contributing 50,000 troops. There were no girls in education in Afghanistan at all, and as a result of what we have done, there are now 2 million in education. I hope that the hon. Gentleman will take up that invitation.

Robert Flello: On 12 July, at Britannia stadium, in the presence of Archbishop Desmond Tutu and the legendary Pel, there will be a celebration of goalkeeper Gordon Banks and his achievements. Will my right hon. Friend join me in paying tribute to the achievements of someone who is not only a great goalkeeperperhaps the best in the worldbut a decent man?

Gordon Brown: I should also congratulate my hon. Friend's club, Stoke City, on achieving promotion to the premier league. I am looking forward to meeting Gordon Banks. He was capped 73 times for England, and it is absolutely right that we unveil a statue to him at the Britannia stadium in Stoke.

British Overseas Territories and Crown Dependencies

Andrew Rosindell: I beg to move,
	That leave be given to bring in a Bill to place duties on Her Majesty's Government regarding the participation in and recognition at State occasions of the British Overseas Territories and Crown Dependencies; to make provision about educational material concerning their constitutional and historical status; and for connected purposes.
	The United Kingdom of Great Britain and Northern Ireland is fortunate to enjoy a history of which each and every one of us in this House can be truly proud. Our forebears sailed the oceans to the four corners of the globe, discovering new territories and helping to build the modern world by establishing a rule of law, providing education, teaching the English language, spreading the values of Christianity and building a lasting constitutional framework under the British Crown.
	Today, most countries have chosen to seek independence from Britain while retaining a special link to both the Crown and the United Kingdom through their membership of the Commonwealth of nations. Many, such as Australia, New Zealand and Canada, continue to retain Her Majesty the Queen as their Head of State. However, 17 territories in the world have chosen not to seek independence and instead remain a part of the great British family, spanning from the tip of Europe to the Pacific ocean, from the Caribbean to the south Atlantic and from the Indian ocean to the west coast of Africa.
	There are also the five dependencies of the Crownfour in the English channel and one in the Irish seathat have never been colonies, but enjoy a unique constitutional status as part of the British isles, but not the United Kingdom itself. Their loyalty to the British Crown has remained steadfast for many centuries and continues to this day. The British overseas territories and Crown dependencies are Britain's extended family, and they are also our truest friends who have stood by us through good times and bad, and through conflict and peacetimealways remaining true to their British roots and heritage, to the Union flag and the Crown itself.
	Today, many young men and women from overseas territories and Crown dependencies are serving in the British armed forces on the front line in conflicts around the world, fighting for Queen and country. I pay tribute to all the people of the British overseas territories and Crown dependencies, including Gibraltar, a rock so British, with its magnificent people, who have shown time and again the strength of their determination to keep the Union Jack flying over their homeland.
	In the Caribbean, there is Anguilla, the British Virgin Islands and Turks and Caicos Islands, along with Montserrat, which is known as the emerald isle and has suffered so much from volcanic eruptions, and the Cayman Islands, which were so cruelly devastated in 2004 by Hurricane Ivan. There is also Bermuda in the mid-Atlantic and, in the south Atlantic, St. Helena, Ascension Island and Tristan da Cunha. The Falkland Islands, which last year celebrated their 25th anniversary of liberation, following the conflict of 1982, have grown and developed into a self-sufficient, prosperous and modern democracy since the illegal invasion by Argentina was repelled by Her Majesty's forces. Then there is the island of South Georgia and the South Sandwich Islands, as well as the British Antarctic Territory and, in the south Pacific, there are the Pitcairn Islands.
	The British Indian Ocean Territory and the British sovereign bases of Akrotiri and Dhekelia are now vital military outposts, serving both the United Kingdom and our NATO allies. I also pay tribute to the Crown dependencies of the Channel Islands, including Jersey, Guernsey, Alderney and Sark, whose association with the Crown and with Britain goes back to before 1066, and which survived so gallantly the Nazi occupation during world war two. Then there is the Isle of Man, an ancient kingdom to be found at the heart of the British isles, whose people are fiercely proud of their Manx nationhood and home rule, while always remaining loyal to Britain and the monarch, or, as they say, Lord of Man.
	Yet I fear that we in the United Kingdom have not always given the British overseas territories and Crown dependencies the recognition, status and honour that they richly deserve. The Bill would enshrine in law an obligation on Her Majesty's Government always to promote, uphold and defend them, through education and recognition at state occasions, when they should automatically be given the status befitting a territory of the Crown.
	In schools, libraries and all educational institutions, maps of the United Kingdom should always include insets of the British overseas territories to demonstrate their existence and to show their importance to Britain today. Just as the Danish include the Faroe Islands and Greenland, and the French include Guadeloupe and New Caledonia, so we should include Gibraltar, the Falklands Islands, Montserrat and so on.
	Every pupil should be taught at school in the United Kingdom of Great Britain and Northern Ireland about the overseas territories and Crown dependencies and be given the opportunity to learn about their place in the history of the British peoples. In lessons on citizenship, history, politics and geography, they should be given their rightful place on the curriculum.
	At state occasions, my Bill would seek to oblige Her Majesty's Government to include the flags, emblems and representatives of all our territories. On days such as the Queen's birthday parade of trooping the colour, those nations and territories where Her Majesty remains the Head of State should expect to see their flags displayed most prominently. I regret to inform you, Mr. Speaker, that, despite my calls in the House for that to happen, on Saturday 14 June this year, no flag of any of our territories was displayed in Horse Guards parade on that most British of occasions.
	On Remembrance day, surely it is only right that representatives of the overseas territories and Crown dependencies should be permitted to lay a wreath at the Cenotaph, alongside those from the Commonwealth nations. Indeed, at all national events and state and royal occasions, and here in Parliament, too, their representatives should be received as a part of our British family, and not as if they were from a foreign country.
	In tourism, much more could be done to promote the British overseas territories and Crown dependencies, especially the Channel Islands and the Isle of Man, which are geographically so close to the United Kingdom. My Bill would enable all those positive ideas and many others to be carried forward.
	The British overseas territories and Crown dependencies are magnificent examples of places that exercise self-government and home rule over their own affairs, while firmly remaining a cherished part of the British family. We in this House and the people of the United Kingdom as a whole should be immensely proud of them all, for their uniqueness, their character and charm, their strength and spirit, and their ability to prosper and retain their constitutional stability and democracy in an ever-changing world. But above all, we must salute and thank the Crown dependencies and British overseas territories for their unshakeable loyalty to the Union flag, the British nation and the British Crown. It is precisely this that my Bill seeks to do. I commend it to the House.
	 Question put and agreed to.
	Bill ordered to be brought in by Andrew Rosindell, Mr. Henry Bellingham, Daniel Kawczynski, Sir Nicholas Winterton, Angela Watkinson, Mr. David Evennett, Mr. Nigel Evans, Mr. Nigel Dodds, Mr. Lindsay Hoyle, Geraldine Smith, Jeff Ennis and Bob Russell.

British Overseas Territories and Crown Dependencies

Andrew Rosindell accordingly presented a Bill to place duties on Her Majesty's Government regarding the participation in and recognition at State occasions of the British Overseas Territories and Crown Dependencies; to make provision about educational material concerning their constitutional and historical status; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 128].

Orders of the Day

Finance Bill
	  
	[2nd Allotted Day]

Not amended in the Committee and as amended in the Public Bill Committee,  further  considered.

New Clause 17
	  
	Report on proposed tax changes

'(1) The Treasury shall publish each year, not later than the Pre-Budget Report, a report containing information about the technical content of any tax changes which it proposes to include in the following year's Finance Bill.
	(2) Subsection (1) does not require the publication of any information about proposed changes to rates of taxation.
	(3) A copy of the report must be laid before the House of Commons.
	(4) Standing orders may make provision for the scrutiny of the report.'. [Mr.  Philip  Hammond.]
	 Brought up, and read the First time.

Philip Hammond: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss new clause 18 Tax simplification
	'(1) The Treasury shall publish each year, not later than the Pre-Budget Report, its proposals for the simplification of the tax code of the United Kingdom.
	(2) A copy of the proposals must be laid before the House of Commons.
	(3) Standing orders may make provision for the scrutiny of the proposals.'.

Philip Hammond: New clauses 17 and 18 are what I might describe as specimen clauses, and deal with simplification and transparency in the tax system. Our intention is to have a debate and to get a response from those on the Treasury Bench on the crucial issues of simplicity and transparency in our tax system. New clauses 17 and 18 allow us to do that, by focusing on two aspects of that wider agenda.
	It is perhaps worth notingI am sure that Government Members will have spotted this alreadythat new clause 17 replicates proposal 37 of the report of the tax reform commission, which was set up my hon. Friend the shadow Chancellor and is ably chaired by the noble Lord Forsyth.

Jeremy Browne: Will the hon. Gentleman update the House on the intention of his Front-Bench team to adopt all the proposals put forward by Lord Forsyth's commission? I remember that Lord Forsyth recently described the Conservatives' current tax proposals as mad. A gap appears to have opened up between the hon. Gentleman's position and that of the chairman of the commission.

Philip Hammond: If I were to choose a word to describe the report produced by my noble Friend, it would not be mad. I would describe it as extremely interesting and very helpful. Some of the proposals are clearly ones that we will wish to adopt. Others might fall into the category of things that we would love to adopt while recognising that we would be unable to do so because of the mess that the public finances are in and the chaos that we are likely to inherit. It is also fair to say that other proposals do not resonate with my colleagues on the Front Bench.
	We do not need to be coy about this. The job of a party in opposition aspiring to government is to do the work. That involves asking peopleincluding experts and outsidersto look at issues and to report on them. If we were to create an environment in which, every time the Government or the Opposition asked a third-party organisation or outside body to look at an issue and put forward proposals, our political opponents were able to present those proposals as though they were adopted policy, we would simply shut down the debate. I urge the hon. Gentleman not to go down that route.

Jeremy Browne: I strongly agree with the point that the hon. Gentleman has just made; such an approach would discredit the wider political process. I remember, however, on that same line of inquiry, that the shadow Chancellor said that he would support a flat-rate tax. In fact, he cited examples in eastern Europe that we should learn from. I presume that that is the kind of imaginative thinking that the hon. Gentleman is talking about. Can he tell us what progress has been made in that regard?

Philip Hammond: If the hon. Gentleman looks carefully at what my hon. Friend the shadow Chancellor has said, he will see that my hon. Friend supported a flatter and simpler tax system. He has always recognisedas, I think, do all hon. Members on both sides of the Housethat a flat-tax system that might be attractive in an economy that is in the early stages of development and that has, in particular, an undeveloped system of tax collection, would not be appropriate in a mature tax jurisdiction such as ours. It is important that we look at all these issues, however, and that we are able to do so with no holds barred.
	Many people to whom we speak, including those with an intimate knowledge of how government works, and including some who were sitting on the Treasury Bench only a couple of years ago[ Interruption.] No, I said a couple of years ago, not a decade ago. Those people tell us repeatedly that there is little opportunity for strategic thinking in government. That strategic thinking needs to be done while in opposition, and a party needs to come to government with a clear idea of where it is going. If we are fortunate enough to be elected to government, we certainly intend not to repeat the mistakes of Mr. Anthony Blair, who knew a lot about getting elected, but not a lot about what he wanted to do when he got there.
	Mr. Speaker, I am sure that you would like me to return to the subject of the debate. The commission looked at many aspects of our tax system, including matters of process. In scrutinising the Bill so far, our attention has rightly been focused primarily on the substance of the individual measures in it. Now, however, it is appropriate to pause to consider the processes by which we make and manage our tax law.
	There is a long-term driver and a short-term driver to this agenda. Over the past decade, the tax system haspartly by designbeen made much more complicated. In our submission, it is now in urgent need of simplification. Public confidence in it has been undermined by the endless stream of stealth taxes, which began with the great pensions raid at the beginning of this Labour Government, when none of us knew about stealth taxes. We had not heard the term before; indeed, it had not even been coined. It was some time before people understood the fiscal implications of what was being done. This has continued right up to the proposals announced in this year's Budget for a retrospective increase in taxation on cars purchased before 2006, about which we will hear moreperhaps a great deal morelater this afternoon.
	Over the same period, it has become clear that the vast weight of new tax legislation has simply overwhelmed the capacity of Parliament effectively to scrutinise it. That is the long-term driver. The more immediate driver and what has focused our attention rather urgently on this issue is the fiasco of last year's pre-Budget report and the elements of Budget 2007 that are enacted in the current Finance Bill.
	The Chancellor's proposalswhen I refer to his proposals, I do so in the loosest sense to mean what he stood up and announced in the pre-Budget reporton the taxation of non-domiciled residents and on the abolition of taper relief provoked a furious reaction from the business community. I am sure that all hon. Members will remember the fierceness of the response and the unity of purpose across a group of business organisations that, quite frankly, do not often sing from the same hymn sheet. On this issue, they were united, partly on the substance of the proposals, but significantly on the manner of their introduction on account of the total absence of advanced signalling and of consultation with interested parties.

Jeremy Browne: Does the hon. Gentleman agree that his case, which I agree with, is further strengthened by noting the number of Government amendments to their own legislation that are to be debated later? They follow dozens of amendments on the same section of the Bill. Would it not have been better if the Government had engaged in processes of thought and deliberation before making their announcements rather than during the legislative process?

Philip Hammond: The hon. Gentleman is right. He is making a slightly different point about a different part of the tax legislation process, which I will also address in due course.
	The Chancellor was eventually forced into humiliating climbdowns on both issues, as well as subsequently having to kick his ill-thought-out, unworkable and highly damaging proposals on the taxation of foreign profits and on income splitting into the long grassand, presumably, the grass must be long enough to get him to the other side of a general election. All those issues affect businesses. The saga of the 10p tax rate does not affect businesses directly, but is yet another example of poor scrutiny and poor process. I am sure that Government Members would say amen to that. They must realise more than most how desperately important it is not to repeat the type of mistakes made with the abolition of the starting rate of tax. It was not only a bad measure in principle, as it was badly explained, poorly understood, deferred in implementation for all the wrong reasons and then reversedor at least mitigatedin a way that has further undermined confidence in the stability and structure of our tax legislation system.
	Although the measure was announced in 2007 and immediately identified as a potential problem, it was the failure to grasp the scale of the problem among those who later became concerned about it that has been so highly damaging to the Government. Although it is not my job to worry about the damage that the Government seek to inflict on themselves, it is instructive to note that this not particularly complex piece of tax legislation impacted negatively on 5.3 million ordinary peoplewhom we often think of as votersrather than businesses, yet it still took the best part of a year before the debate on the issues really got going. I am trying to make a serious point, as this indicates the failure of the House's mechanisms for scrutinising tax legislation. We need to ensure that such legislation is understood, if not by every hon. Member, but by a wide enough audience so that any serious political problems can be identified at the earliest possible stage.
	To return to the issues of non-doms and capital gains tax changes announced in the pre-Budget report, the Chancellor's U-turns, which I have already mentioned, were not very neatly executed. Immediately after the pre-Budget report, No. 10 began briefing that there might be concessions on capital gains tax. What happened is that the Prime Minister was taken aback by the scale and ferocity of the business response and saw his laboriously constructed base of business supportnot to mention business donorsevaporating overnight. He responded accordingly by kicking the man next door. The concessions dribbled out over the following weeks and months, but in a way that meant businesses, and particularly those entrepreneurs considering a sale of a business in the near term, did not know where they stood until as recently as early March.
	I remember meeting groups of entrepreneurs and small business owners back in late October or November after the announcement had been made. There seemed to be an even split between, on the one hand, those who felt that the only safe route was to gain the benefit of the taper relief by cutting and running and trying to sell their businesses even as the economy was slowing down against the backdrop of the credit crunch, which made the financing of business acquisitions quite challenging, and, on the other, those who put their faith in the trickle of news from sources in the Treasury indicating that concessions would be made. It was a very destabilising situation.

Stewart Hosie: The hon. Gentleman mentioned that there was clarity by March, but any such clarity over capital gains tax applied only to the easy things, like selling a business that one might have sold anyway. He will be awareI suspect that this is part of the reason for his new clause 17that it emerged in Committee that share option schemes, approved or otherwise, in respect of the CGT changes looked like treacle and there was no clarity at all. Will he turn his mind back to the share option debate we had upstairs in Committee as an exemplar of why we need new clause 17 or something similar to it?

Philip Hammond: The hon. Gentleman is exactly right, but I do not want to pre-empt our debate on the next group of amendments.
	I do not deny that I have made some partisan points so far, but I hope that everyone will recognise that there is a genuine problem. I shall address it in more detail in a few moments, but the real problem is our capacity as parliamentarians to deal with vast volumes of complex and technical legislation. Of crucial importance is the Government's capacity, against what is a pretty tightly constrained timetable in respect of the Finance Bill, to deal with the many technical issues that need to be clarified between the headline announcements in a Budget speech and the passage of the legislation on to the statute book. It goes beyond that because, in addition to the capital gains tax changes, a raft of guidance has to be published, understood and commented on. As we shall see when we debate the next group of amendments, the guidance can sometimes be critical in debating the detail of legislation. Clearly, we need a new and more effective mechanism for the scrutiny of our tax legislation.
	As with CGT, the Government's original proposals for non-doms soon disintegrated as item after item on the Revenue's shopping list was scrapped as the political masters of the process finally grasped the scale of the damage that risked being inflicted and the extent to which they had lost control of the process to their own bureaucrats. I do not expect the Economic Secretary to answer this point, but it is pretty clear to us that the problem with the non-dom legislation was due to what is known in this place as gold-plating.
	The usual example is the European Union handing down a directive. In this instance, the Chancellor made a decision on the taxation of non-doms, and then handed it to British civil servants whose natural instinct is to reach for the nearest kitchen sink and try to bolt it on to the original decision. I have an image of officials of Her Majesty's Revenue and Customs going to filing cabinets that may have been left untouched for years, dusting off packets of documents containing various wish lists of ideas for taxing non-domiciled residents, and bolting them on to the original idea that the Chancellor and his team presented, in a way that not only made the legislation complex butand I suspect that this is something that a politician might see more readily than a civil servantcaused it to send a very negative set of signals that would be extremely damaging.
	Again, the process was messy, with individual concessions painfully extracted and gracelessly awarded over a fairly long period. As the hon. Member for Taunton (Mr. Browne) has said, many technical but important issues were introduced only during the Committee stage. Indeed, the residence and domicile provisions, arguably the most complex, had to be timetabled for the very end of the Committee's deliberations to give the Government more time in which to work out the detailed provisions.
	Even today, as the hon. Gentleman said, we have before us a raft of new Government amendments to the clauses on residence and domicile. They will be debated today, and Opposition points about them will be put today to Ministers who cannot realistically be expected to consider them, digest the arguments, evaluate them and respond to them in the course of the debate. Unfortunately, however, there can be no further scrutiny of a Finance Bill with no stages in the House of Lords. This is the path to bad legislation. I predict, with no fear of contradiction, that next year's Finance Bill will contain provisions correcting, amending and clarifying the residence and domicile clauses in this Bill, precisely because many of the details have been introduced only at the very last moment.
	The reaction of those affected has been predictable. Many have prepared to leave the United Kingdom, and some have already done so, but all of them, whether they have left or stayed, have had their confidence in the transparency and predictability of the United Kingdom tax regime shattered, and that will have significant long-term consequences for the United Kingdom's attractiveness as a place in which to do business. The same applies to capital gains tax. Some businesses were sold prematurely, and some, as I am sure the Economic Secretary knows, were transferred through artificial transactions designed to salvage the benefit of taper relief. But far more businesses were not sold, and the entrepreneurs who run them have lost their faith in the tax system on which they had relied in calculating the returns that they would earn.
	That is serious not only because it reduces the attractiveness of the UK as a mature and stable place in which to do business, but because every time the Government undermine the incentive that they have given in earlier legislation, they significantly reduce the behaviour-influencing power of the Treasury. We all know that in all fields, including that of environmental taxation, the Treasury focuses, quite properly, on the ability to influence behaviour through the fiscal system.
	Taper relief was hailed by the Prime Minister, then the Chancellor, as one of the prime examples of Labour's commitments to business and enterprise. He said:
	I will introduce a new structure of capital gains tax which will explicitly reward long-term investment, and which is based on a downward taper and lower tax rates. It will encourage people to hold on to assets in the long term.
	There is no doubt in my mind that the taper relief regime did underpin the creation of many new businesses, and did inspire the effort and sacrifice required to grow many others. Many businesses are built by people who have made a conscious decision to forgo the relative comfort of a highly paid job in a large corporation for the rather rockier path of building up their own smaller businesses, with all the risks that that implies, and all the pressures on their personal lives that anyone who has ever been in that position will understand only too well. The fact that many entrepreneurs who engaged in that process have been now been left stranded without the benefits that they had calculated has left a bitter taste in their mouths, and will make the next set of incentive proposals from Government significantly less effective in driving their behaviour.
	Business hates nothing more than uncertainty. Uncertainty adds to the cost of doing business: it requires a risk premium to be factored into business return calculations. An unstable and unpredictable tax regime makes the UK less competitive, and clearly that is partly connected with the nature and instincts of the Government of the day. New Labour has demonstrated more clearly to business in its actions over the past eight months than any number of words could ever demonstrate that it does not understand how business works, that it does not understand the mentality of enterprise, and that it is no friend of business and cannot be trusted with Britain's business economy. But it is not only about political leadership. This is not only a party-political issue. The whole fiasco of the past eight months also says something about our process of tax law making.
	Good government can be delivered by the happy chance of good governors operating in a chaotic system. However, business, and even citizens, would prefer not to rely on chance to deliver them good government through good politicians, but rather to institutionalise good government through structures and processes that ensure that even when they are afflicted by bad politicians who fail to appreciate the significance and, sometimes, the unintended consequences of their actions, those politicians will be constrained to behave in a way that minimises the damage. It is not only about putting better politicians in place, although we are very keen to do that; it is also about ensuring that the institutions and the structures are right.
	So what have we learned from all thisthe non-dom and CGT fiascos, and the disintegration of the pre-Budget report and the 2008 Budget? First, let me again quote the Treasury Committee. Surprise announcements designed to
	pull a political rabbit from a hat
	are simply not appropriate or responsible, certainly in the case of business taxation but also, I would argue, more generally in the case of taxation announcements. Businesses and investors will punish not Governmentsand that is the problem: if they had a vote and punished Governments, it would be finebut nations that allow their Governments to deliver unsatisfactory tax surprises in this way.
	Secondly, we have learned that tone is very important. Much of the reaction over residence and domicile was fuelled less by the substance than by the hostile tone of the announcement, and the failure of the politicians in charge of it to appreciate the damaging message that HMRC was sending. Ironically, it was left largely to Opposition politicians to run around the City trying to soothe nerves as we sought to persuade the Government of the need for change, and to persuade those who, in many cases, are critical to the wealth and prosperity of our economy that they should just sit on their hands a little longer while we saw what could be achieved in terms of getting the Government to change their mind.
	Thirdly, the finality of the proposals at the time when they were announced took business aback and shocked it. All complicated issues of this nature should be published in draft for proper consideration and consultation, for the avoidance of political embarrassmentas I hope the Economic Secretary will now clearly recogniseas well as for better management of the economy.
	What we have seen over the past eight months is no way to go about tax reform. The succession of hastily cobbled together announcements, climbdowns, confrontations and U-turns deliver the very opposite of the stable environment that businesses and individuals need so that they can understand the tax implications of their decisions and plan accordingly.
	Lest it appear that I am having a go at the current Chancellor, let me be clear that the puppet master behind him is the real target of my comments. This climate of chaos, confusion and policy reversal was not developed only in the past nine months. For years, Finance Bills have contained measures closing loopholes or reversing incentives created by their predecessors. In March 2004, the then Chancellor closed a tax loophole for the self-employed that he had created only two years previously. He introduced the zero rate of corporation tax for small companies and then changed that virtually every year before he eventually abolished it. In 2003, he announced that residential property would be permitted in self-invested personal pension plans. The industry spent millions of pounds gearing up for the change, and many individuals set about rearranging their retirement plans. The Government robustly rejected advice that came from all parts of the House, including their own Back Benches, that the proposals to include residential property in SIPPs would lead to a disaster, yet at the eleventh hour the decision was reversed, leaving tens of thousands of businesses and taxpayers out of pocket, having to pick up a bill for the Government's incompetence. The capital gains tax taper relief regime has fared only slightly better, lasting nine years before being consigned to the scrapheap, having only months before been held up as the symbol of the Government's supposedly business-friendly agenda.
	The lack of direction, the dithering over policy and the meddling in successive Budgets in an attempt to correct defective earlier legislation, smacks of political and fiscal opportunism, and points to the absence of a coherent underlying philosophy for our tax systemor, if there is such a coherent underlying philosophy, a failure to communicate it to the people who invest in the British economy. British taxpayers and the investors who pour billions of pounds into our economy deserve better. We must never forgetI hope the Economic Secretary never does forget thisthat in the globalising economy of the 21st century, businesses, and, increasingly, skilled individuals, have a choice about where to locate, and also about where they choose to pay their taxes.
	It is clear that Britain cannot win this global contest by offering the lowest rates of tax, as it is faced with competition from emerging economies with a far less developed social and physical infrastructure. To try to do so would put at risk the high-quality public services to which the British people are rightly and understandably attached. However, we must recognise the competitive threat. Traditionally, the advantage to the taxpayer of a higher tax and more mature jurisdiction has been greater certainty, stability and transparency in the taxation system as well as a generally stronger social and physical infrastructure. If Britain is to remain in the competition to attract businesses and high earners while operating a higher cost tax regime than many emerging economies in competing locations, we must at the very minimum offer the stability and certainty that is so valuable to such organisations and people, and for which we are, effectively, with our higher tax rates, asking them to pay. We must be under no illusion that a combination of higher tax levels and the kind of capricious decision making that we have seen over the past eight months will quickly relegate UK plc to the sidelines of this global competition.

John Baron: May I suggest to my hon. Friend that the threat in respect of corporate tax rates comes not only from emerging markets? British companies are moving to other European Union countriesShire Pharmaceuticals is one such suggested companywith lower tax thresholds. That directly threatens job prospects in this country. The threat, therefore, comes not only from emerging markets because tax base comparisons across the EU are also relevant.

Philip Hammond: My hon. Friend is absolutely right. He may have been involved in similar discussions to those that I have with many FTSE 500 companies. Most of them have not taken the decision to relocate their tax domicile, but manyperhaps mostof them feel that they are obliged, in the interests of their shareholders, to investigate the options available to them. Just a few months ago I was told by one of the leading firms of accountants that without exception every one of its FTSE 100 clients had asked it for a report on the alternative tax domicile options available to them, because they are conscious that while managements might have preferencesmanagement may prefer to live in leafy parts of the home counties, or play golf on certain courses, or enjoy the cultural attractions of Londonincreasingly investors, who are global institutions, are asserting their right to have their interests held paramount in the decisions that corporations make. We have to be conscious of that. I hopein fact I am surethat the Economic Secretary is conscious every waking hour that corporations, driven by global investors who have no sentiment whatever about domicile, look at these issues in a cold, hard light, and look to locate to the place that offers them the lowest tax rates and the greatest overall advantages.
	After a decade of Labour government, Britain is a less attractive place to do business than it was, because business taxes are too high and our tax system is too complicated. Thanks to this Government, we now have the longest tax code of any major economywe overtook India with the Finance Act 2007and it is expanding the fastest, with the Government, increasingly buffeted by events, endlessly changing and complicating the system in response to short-term political events and budgetary pressures. Unfortunately, the objective of a simpler, fairer, more competitive tax system has been sacrificed to the Treasury's insatiable hunger for cash and unquenchable instinct to micro-manage. Announcement after announcement has been billed as a simplification or as being in the interests of fairness, but turn out to be nothing more than a crude tax grab. Time after time, the rhetoric of the Budget speech is at odds with the reality revealed by even a cursory analysis of the small print of the Budget documentation. We have had many examples of tax initiatives that start life under the green bannerthey are introduced under the pretence of being green taxesbut which on closer inspection are simply revenue-raising measures. They discredit taxpayers' notion of green taxes. On top of all that, there is also, of course, the endless stream of stealth taxes. That phrase did not exist 11 years ago, but it has now passed into everyday language and can be found printed almost every day of the week in one newspaper or another.
	There is no sense of strategy or direction. The long-term objective to introduce a 10p starting rate of tax was abandoned for short-term political advantage. Sending a clear signal to business that enterprise will be rewarded through a dedicated lower rate of capital gains tax was also dumped. Both were scrapped without a word of explanation or advance warning. After five or six years of dithering on non-doms, with the problem conveniently lobbed into the long grass, and uncertainty pervading, there was a bungled legislative proposal. Now, there is more uncertainty on income splitting and foreign profits as the Government duck those difficult decisions.
	Uncertainty and complexity both impose a burden on business just as surely as do taxes themselves, but at least taxes benefit the Treasury. Uncertainty and complexity reduce UK competitiveness, increase the costs of managing the tax system and offer absolutely no offsetting benefits at all, unless we consider the employment of accountants to be an offsetting benefit.
	So what is to be done? To help us to answer that question, the shadow Chancellor set up a tax reform commission, which reported at the end of 2006. Following on from that work, he established a working party, led by Lord Howe of Aberavon, a former distinguished Chancellor of the Exchequer, to take forward the tax recommendations that the commission made in the narrow area of reform of the making of tax law. There are five key issues. First, we need to improve the clarity and transparency of the process of tax law making. Secondly, we need to introduce clear advance signposting of the direction of future changes, especially in business taxation, so that businesses can prepare and the behaviour-influencing capacity of the tax system is maximised.
	Thirdly, we need to restore proper parliamentary scrutiny of tax legislation proposals. Fourthly, we need to institutionalise a simplification agenda, to try to ensure that the process of reducing the complexity and length of Britain's tax code is not dependent on the whim of individual incumbents of the Treasury Bench, but is built into the system. I am not talking about rewriting law just to make it read more easily or to improve the cross-referencing, but about a substantive simplification. Finally, we need to focus on certainty, because that is the No. 1, No. 2 and No. 3 demand of business. Of course businesses would like tax to be lower, regulation to be lessened and the system to be simplified, but anyone who has ever talked to them about the issue will know that above all they want a system that is stable and predictable. They might like to see significant changes to make the system simpler, but I am sure that they would prefer a guarantee that there will be no changes to the system to make it predictable, because that is their No. 1 demand.
	New clause 17 addresses the issue of transparency of process, which is so important to delivering this agenda. Britain is fortunate in that it already has a two-stage budgeting process, which, if it were used sensibly, would offer the opportunity to bring a degree of stability and certainty into the tax law-making system. The pre-Budget report can be used to signal the intentions for the following Budget and new clause 17 would require that all technical changes to tax legislation were published at the time of the pre-Budget report. It would also make provision for Standing Orders to deal with the question of how such technical changes should be scrutinised ahead of the Budget.
	The Chairman of the Treasury Committee, during the course of yesterday's debate, made an impassioned plea to the Financial Secretary for discipline in the way that the pre-Budget report and Budget statements are used. It was a plea for a reversion to the proper purpose of those two reportsand incidentally an implicit plea to the Government not to be tempted down the road of ad hoc tax changes outside the proper structures, as they have been in the face of political pressure and under the weight of their own errors in the abolition of the 10p tax band this year. We on the Conservative Benches endorse that call by the Chairman and, when Lord Howe's report is published tomorrow, he will go further in setting out his views on how to improve the presentation, scrutiny and delivery of our tax law.
	We also need clarity of future intentions. Business decisions are made not so much on current tax rates, but on the basis of known future tax rates. Investment returns depend on the tax regime that an investment will face at the point when it matures and begins to produce profits. Clear signalling can be a positive support for investment and a major influence on behaviour, not only removing the negative of uncertainty, but introducing an advance awareness of intended business-favourable changes, thus stimulating the very supply-side response that such changes are almost always designed to achieve.
	The third aspect is scrutiny. Nobody who has ever sat on a Finance Bill Committee, or wandered inadvertently into a Finance Bill Report stage debate, will doubt that the mechanism we have for detailed scrutiny of what is often highly complex and technical legislation is inadequate. To be bluntand I hope that the Financial Secretary will not mind if I say thisMinisters, who are not tax experts or even accountants, stand in front of a Committee and read out a brief whose technical implications they may not fully understand. Members of the Committee ask questions often fed in by expertsof which, to be honest, they may have only a limited understanding.

Jeremy Browne: rose

Philip Hammond: I hope that the hon. Gentleman does not intend to make some petty party political point.

Jeremy Browne: I never make petty party political pointsonly wise observations. I agree with the hon. Gentleman's observations, but I would caution against saying that only education experts know about education legislation, or only health experts know about health legislation, or only military experts know enough about defence legislation. That would mean that politicians were redundant, but we have an important role in deciding priorities and making real choices. The issue is not only expertise, because there is a political aspect to the process.

Philip Hammond: The hon. Gentleman makes a good point and he prompts me to draw that distinction. I did say earlier in my speech that I thought that what had gone wrong with the non-doms legislation was that the basic idea from the politicians had been hijacked by the civil servants and burdened with various bolt-on goodies to the extent that political common sense then told the politicians that it would not fly. We need to have a sensible and serious debate that distinguishes between the strategic policy decisions that have to be made and the scrutiny of detailed, technical legislation. For example, the hon. Member for Aberdeen

Stewart Hosie: Dundee, East.

Philip Hammond: They are quite close[ Interruption.] They are on the same side of the country at least. The hon. Gentleman and I had a discussion earlier about employee share incentives. The principle is clear, and it is eminently capable of being debated and decided by politicians, but if anybody thought that the resulting legislation was clear, they need only look at schedule 3. The technical wording needed to achieve what the politicians decree is immensely complex. We need to draw a distinction between the policy principles that politicians canand must in a democratically accountable societymake, and the technical implementation of those principles, which is the stuff of experts.

Stewart Hosie: May I give the hon. Gentleman a better example? The 10p tax change may have implications for the 10p tax on savings income, and for the 10p rate on dividend income, which goes up to the basic allowance threshold. That appears in two or three tiny bullet points in an obscure table in the Budget book and does not even form part of the detailed Bill that we are scrutinising. That makes it all the more difficult to understand the implications for savings tax and dividend tax of the 10p tax change.

Philip Hammond: The hon. Gentleman is right. I am sure that we could find hundreds, if not thousands, more examples in the Bill.
	I do not intend to criticise anyone, and I should place on record that the Treasury Ministers who took part in Committee did an excellent job. They were well briefed and they answered questions as helpfully as they were able. I am sure, in the spirit of candour, that they would equally want to acknowledge that, in Committee, if I pulled from my pocket a question from a senior tax partner in a large firm of accountants, it occasionally caught them on the hop. I ask myself whether that is the most constructive way in which to scrutinise tax legislation.
	We are not experts in this placewe cannot be. People out there spend their entire lives dealing with tax, and not only thatthey may spend their entire lives dealing with one tax, such as capital gains tax or the taxation of overseas domiciled residents. Sometimes, they deal with just a subsection of that subject. If we are to maximise the advantage that we can get from their embedded knowledge, we must, of course, try to involve them in the scrutiny process.
	At the moment, the scrutiny of tax legislation operates in a bit of a fantasy world. The debate is conducted in Committee between politicians who are essentially lay people, in tax terms, as a proxy for a real but unseen debate between the experts at HMRC and the tax professionals. To some extent, that is a pragmatic arrangement. While the Bill was in Committee, HMRC held an away-day for tax experts. A number of questions were posed and some answers were given. The questions and the answers then found their way to members of the Committee. It is a kind of shadow process.
	We ought to ask ourselves whether being a little more candid about our limitations would lead us to consider different scrutiny arrangements that could bring out of the shadows some of those people who contribute so much to the process but are unable to play a full part in it, whether they are independent experts or expert officials in HMRC. The Treasury Committee, of course, does an excellent job through its ability to call witnesses but there needs to be a legislative scrutiny arrangement as well as the oversight role that that Select Committee performs. I do not think that Parliament should be at all ashamed of the difficulty that even highly intelligent and very diligent lay people might have in dealing with some complex technical legislative changes. Instead of trying to conceal the scrutiny deficit, we should acknowledge it and try to put in place the mechanisms to deal with it.
	My noble Friend Lord Howe will tomorrow set out his ideas for addressing those concerns. I invite anyone who doubts the need to address them to look at the subject matter of the next group of amendments and to spend a little time reading schedule 3. I recommend inserted sections 169K and 169P as a starterthey are just a taster of the almost absurdly complex nature of tax legislation.
	We need to create the necessary arrangements to institutionalise the drive towards the simplification of our tax system. As a first step, new clause 18 would require the Treasury each year to publish specific proposals for the simplification of the UK tax code. It would not require a mere rewriting to tidy up the language and the cross-referencing, but a substantive simplification of the system. New clause 18 would also provide for Standing Orders to make arrangements for the effective scrutiny of proposals brought forward by the Treasury in the report that is called for.
	If we do not do that, our tax code will continue to grow exponentially, notwithstanding that it is already the longest in the world. It is now reaching the point where it is becoming self-defeating and self-perpetuating. Each new complex raft of legislation creates so many potential loopholes, avoidance mechanisms and technical difficulties that its intention is regularly undermined and often requires further rafts of legislation to plug the gaps, further lengthening and adding to the complexity of the tax code.
	My noble Friend's report will set out his proposals for institutionalising the drive for simplification of our tax system, not as a one-off exercise, but as a continuing embedded process. I am delighted to have had the opportunity to notify Parliament first of my noble Friend's initiative, which he will announce tomorrow, and I hope that the Government might take note of that and follow its precedent in giving Parliament a bit of warning of some of the announcements that are coming up.
	Finally, in order to deliver certainty to the system, we also need to address the growing discretion that is being given to HMRC officials in the interpretation of the lawthat feature was particularly evident in the Bill. We need to create mechanisms that will allow taxpayers to obtain certainty about their tax position. Many other jurisdictions allow less discretion for officials but provide a clearer and more accessible pre-clearance regime that allows taxpayers to ascertain their tax position precisely. I am afraid that we are going in the wrong direction, with a limited pre-clearance regime and the exercise of an increasing amount of official discretion.
	Right now, Britain faces an economic downturn and considerable uncertainty about our economic future. However, alongside a response to the short-term challengewe need such a response from the Governmentwe need to think about the long-term competitiveness of the UK as a place to do business. As we come out of this economic slow-down and investment starts to multiply again in the global economy, investors who are casting their eye around the world to decide where to make their marginal investment should see the UK as an attractive, stable predictable environment in which to deliver that investment. There is scope for a significant improvement to the UK tax environment without any tax cost to the Exchequer.
	Clear and open processes, with proper engagement and consultation at every stage; a grown-up approach to tax law, including the abandonment of the fascination for rabbits being pulled out of hats in the penultimate paragraphs of Budget speeches; politicians recognising the limits of their technical capabilities and restructuring the scrutiny process accordingly; a serious institutionalised drive towards simplification of the system; and clear rules, with limited official discretion to give taxpayers certainty of their positionthose are the key issues that we need to address if we are to maintain Britain's competitive place in the global trading world.
	In the short term, the scope for reductions in the overall burden of business taxation is likely to be limited due to the state of the public finances, so, when the economic recovery begins, we must seek other routes to improve Britain's competitiveness and attractiveness as an investment and business expansion location. The agenda will send a signal to business that UK plc wants to begin the long process of rebuilding its reputation as a mature, stable and attractive location for businessa reputation that, I am afraid, the Government rather casually placed in jeopardy in their darkest hour last November [ Interruption. ] The hon. Member for Taunton thinks that that was not their darkest hour; perhaps the darkest hour is yet to come.
	The message must be that our tax system is too important for the stability and prosperity of our country to be used as a platform for political posturing. There must be no more short-term stunts to wrong-foot political opponents and no more un-signalled changes. StableI might dare to say boringis good when it comes to business taxation. We are clear where we stand on the issue. We have a long-term commitment to transparency, scrutiny, simplification and certainty in our tax system.
	New clauses 17 and 18 will make a start. Tomorrow, my noble Friend Lord Howe will offer detailed suggestions of his own as to how we might achieve some of the other objectives that I have mentioned. We will scrutinise his report carefully, and although it is a report to the Conservative party, we will be publishing it, so I invite the Government to scrutinise it as well. My noble Friend is an extremely experienced politician who has huge experience of simplifying and rationalising the UK tax system from when he inherited a top marginal tax rate of 98 per cent. from the Labour Government in 1979.
	I hope that the Government will take note of our initiative. They must surely have understood by now the risks of playing games with the tax system and the damage, including self-inflicted damage, that it can do. If they do not take up our agenda, the country, and especially the business community, will know that the next Conservative Government will do so. A reputation for fiscal stability and business-friendliness is hard-won over a long period, as I think even the Prime Minister will remember, but it can be blown away in the space of a few months, as we have seen since the pre-Budget report.
	Britain faces the challenges of a global economic slow-down, and in the longer term, perhaps even more challengingly, a shift in the balance of economic power from the established industrial nations to the emerging economies of the world. That shift is already under way, and I suggest that it is irreversible. We in Britain can ill afford such profligacy with our pro-business credentials if we wish to preserve the prosperity of our citizens and protect our tax base so that we can continue to enjoy high-quality public services.
	The process of rebuilding confidence in the UK's fiscal process will be slow and painful. It had better start now. I commend new clauses 17 and 18 to the House.

Jeremy Browne: It is a privilege to follow what felt like a Reithian lecture, certainly in its length and to some extent in its content. I agreed with large parts of what the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, some of which was not particularly partisan and may even assist the House in its future deliberations. There were other parts about which I had some reservations, but should the Conservatives choose to press either new clause 17 or new clause 18 to a Division, my party will support them. The former would require the Government to report annually on the technical tax content of each Finance Bill, and the latter would require annual reporting on how the Government intended to simplify taxation.
	We have already had quite a lengthy debate, if I can call it that, and I shall not speak for long because I know that others wish to dwell on other matters later. I wish to make a couple of brief points to follow those made by the hon. Gentleman. First, there is virtue in simplification. A lot of people are intimidated by the tax systemcertainly if they are trying to file their own tax return, but even if they are using accountants to help them. There is merit in simplicity, and one of the problems has been that when the Government have tried to target tax breaks on different sections of the economy or categories of individual, they have introduced excessive complexity. Even when they have made a virtue of simplification, as they have sought to do in recent Budget statements, they have then had to unpick that simplification to rectify political controversies. Nevertheless, there is virtue in pursuing simplification as an objective.
	The hon. Gentleman accused the Government of introducing stealth taxes, which is of course true. He talked about the discrediting of environmental taxation, and we will come to that subject this afternoon when we discuss the retrospective introduction of vehicle excise duty increases. It is only fair to say in passing that Chancellors of all political persuasions have sought to place the tax burden in areas where they thought the public would notice its effects least. It is an irony of sorts that Lord Howe of Aberavon is being asked to report to the Conservative party. People will remember him for many reasons, one of which is that he was the Chancellor who increased VAT from 9 to 15 per cent.
	One of Lord Howe's successors, Lord Lamont, who taught the current leader of the Conservative party all that he knows about the matter, further increased VAT from 15 to 17.5 per cent. He made that tax-neutral change to VAT so that he could reduce the newly introduced council tax. I think it is fair to sayeverybody accepted it at the timethat he calculated that people would be grateful for the cut in their council tax more than they would notice the increase in their VAT, which after all is not normally itemised with each purchase. It was a straightforward calculation by the then Conservative Chancellor that he could introduce revenue-neutral proposals that would bring greater stealth to the system.
	Of course, there are now people across the country who pay more as a result. It is very noticeable when one buys something expensive such as a new car. The difference between the VAT rate of 9 per cent. when the Conservatives came into government and the rate of 17.5 per cent.almost doublewhen they left government means that a hefty amount is added to the overall bill.

Philip Hammond: I must defend my noble Friend Lord Howe. I do not know how old the hon. Gentleman was back in 1979, but I suspect that he was not much focused on VAT. There was a deliberate and conscious shift from direct to indirect taxes, but that had to be done because the top marginal rate of direct income tax was 98 per cent. It was not done in a stealthy way, and I assure the hon. Gentleman that it was not unnoticed by the population.

Jeremy Browne: I take the hon. Gentleman's point, and I was not preoccupied with VAT in 1979, mercifully. Oddly, here we are 29 years later and I am still paying the VAT that the Conservatives introduced every time I buy something that is not exempt from it. To be fair, the hon. Gentleman might have been talking to one of his hon. Friends when I said that Lord Lamont used an increase in VAT to fund a reduction in council tax. It is fair to say, and everyone will acknowledge, that he was trying to reduce an unpopular tax by increasing one that was less visible to the public. I am not making a particularly major point, just saying in passing that the desire to tax people in the way that they are least likely to notice is not unique to Labour Governments. It has been a feature of Governments of all parties.
	The hon. Gentleman made some interesting comments about the process of scrutiny of Finance Bills. It is certainly trueany Member who does not acknowledge this is either a tax expert or not being entirely frankthat some of the deliberations that we are asked to undertake would more appropriately be resolved by people with expertise in the matter. A greater role can definitely be played by people beyond this Chamber who can add their expertise. My only cautionary note, as I said in an intervention on him, is that I am always guarded about people thinking that all tax matters can be resolved by experts. I know that he acknowledged that point. One tends to find that experts come up with all kinds of solutions, but often their cumulative solutions do not add up to an overall solution that the public find as agreeable as they would expect if they asked the experts to usurp the role of the politicians, about whom they are less confident but who can weigh up the solutions.
	Anyone who has led a council will know that some officials are adept at proposing strings of savings and economies to keep down council tax, but that a politician's eye is needed to spot which recommendations are likely to be popular and which will cause a party to lose control of the authority. The same is true of national Government: there will always be a political aspect to the process, regardless of how many experts are deployed.
	Given the length of the speech made by the hon. Member for Runnymede and Weybridge, it was unlikely that he would not touch on my final point, but it has become especially topical in the past dayor even yearor two. The Treasury Select Committee has said that the current Prime Minister liked to pull rabbits out of the hat when he was Chancellor. No one is going to accuse the present Chancellor of displaying similar showman-like qualities, but his predecessor was keen to do so in his Budgets.
	When the PBR was introduced as part of the annual set of major Government announcements in this House, we assumed that its purpose was to inform the main Budget. Instead, it has become a sort of secondary, lower-status Budget in its own right. It can be used to introduce tax changes, but the element of consultation is far less of a feature than many wanted it to be.
	Ironically, the consequences have been bad for the Government. The current Prime Minister introduced the PBR, but he has been the one most damaged by his tactics in the House. The abolition of the 10p tax rate is one example, but others include the inheritance tax schemeand there are not many hon. Members who do not think that was rushed through for party political reasons, with inadequate deliberationand the proposals for non-doms and capital gains tax. Later this afternoon, we will talk about the retrospective element of vehicle excise duty, which is yet another policy of whose dangers the Government and Labour Back Benchers seem to have become aware only after it was announced. It would have been in their interests to consider all those matters in greater detail beforehand.
	For all those reasons, new clauses 17 and 18 have merit. This discussion has been interesting and wide ranging, and we look forward to hearing the Minister's response.

Kitty Ussher: This has been a wide-ranging and useful debate. I congratulate the hon. Member for Runnymede and Weybridge (Mr. Hammond) on speaking for exactly an hour, although my experience in the Finance Bill Committee tells me that he has managed the feat before. My congratulations also go to the hon. Member for Taunton (Mr. Browne), on not matching that record.
	In the interests of making progress, I shall not touch on all the topics that have been raised, my excuse being that some will be discussed in connection with later groups of amendments. New clauses 17 and 18 propose that the Treasury publish each year, not later than the PBR, a report containing information about the technical content of any tax changes, aside from rate changes, that it proposes to include in the following year's Finance Bill, as well as its proposals for the simplification of the UK's tax code.
	The Government use the PBR and the Budget to set out decisions on the tax system. We are committed to a fair and efficient tax system that supports business, individuals and sound public finances. We are also clear about the process: in the Finance Act 1998, we set it out in the code for fiscal stability that the PBR should be consultative in nature and include, so far as reasonably practicable, proposals for any significant changes in fiscal policy under consideration for introduction in the Budget.
	We made it clear that the PBR was not to be taken as an indication of all tax policy areas in which the Government might choose to act. The policy has been supported by the conclusions of a recent investigation by the Treasury Committee, and it was not opposed by Opposition parties when voted on during deliberations on the 1998 Act.

Philip Hammond: The theory sounds credible, but the announcement about non-doms, for example, was made as a set of final policy proposals in the PBR, and the lack of detail invited people to speculate about how the policy would impact on them. This Chamber is not always the best place for a constructive debate, given the party political sensitivities involved, but many of the concerns that most upset the people who would be affected turned out to be less serious than was at first thought. The lack of technical detail caused people to speculate, and in many cases they assumed the worst. That was how the damage was done.

Kitty Ussher: We shall deal with the non-doms issue later, and my right hon. Friend the Financial Secretary to the Treasury will no doubt comment in detail on the entire process, but it was precisely by introducing our proposals in the PBR that we allowed time for work with stakeholders to make sure that we got the matter right.
	The code also sets out that publication or consultation on all tax changesbackground tax issues as well as ratesbefore their introduction carries significant risks. The Opposition accepted that when the matter was debated in the House, and those risks include the possibility of significant forestalling activity by existing or prospective taxpayers that could result in a damaging impact on public finances. That activity could also lead to significant temporary disruptions to the behaviour of taxpayers and markets, and to wider disruption in financial markets.
	The publication of a report containing information about the technical content of any non-rate tax changes proposed for inclusion in the following year's Finance Bill would have significant risks, as I have just mentioned. It would also prevent the Government from taking action to address any avoidance or evasion activity arising between the PBR and the Budget that could have further significant ramifications for tax revenue and therefore a negative impact on public finances. The general pointthat the Government should consult through the PBR, where possible, and then implement proposals in the Budgetis correct, but new clause 17 would be unduly restrictive and against the national interest.
	That is not to say that we do not want to consult at all. Quite the opposite: we currently have 29 consultative tax groups routinely working through HMRC. We are consulting far more than in previous years, and I hope that Opposition Members agree that that is a good thing. We had 38 formal consultations last year, and 80 per cent. were for the full 12 weeks. Consultation is definitely a good thing, and we want to do as much as possible, but new clause 17 would constrain us in a damaging way.
	I turn now to new clause 18. Simplification is of course a stated priority when designing and reviewing tax policy, alongside having sound public finances and fairness. After work with business and tax professionals, there is already a significant rolling programme of tax simplification in place, and the Government continue to use PBRs and Budgets to simplify the tax system wherever they can.
	The hon. Member for Runnymede and Weybridge is quite wrong to say that the length of the tax guide indicates how complicated the tax system is. We want to ensure that our legislation is accessible and simple to users, which can involve increasing its length.  [ Interruption. ] I will give the right hon. Member for Wokingham (Mr. Redwood) a specific example: the tax law rewrite project, which is a good example of a consultative, collaborative project and has been widely welcomed by industry, has increased the physical length of legislation but successfully simplified it and improved its clarity for legislators, tax professionals and the public. For example, 150 pages of this year's Finance Bill will simplify and modernise the tax system. So the hon. Member for Runnymede and Weybridge makes a slightly incongruous point.
	The Government already make advance announcements of many proposed simplifications to the tax system. I shall give a few quick examples. We launched three tax simplification reviews last autumn, with the Treasury and the HMRC working in partnership with business and tax professionals, to evaluate how a range of tax policies can be simplified. We received 600 representations. The initial outputs of those reviews were announced in the 2008 Budget, with further updates to follow this autumn. A further review to consider how corporation tax calculations and returns can be simplified was also announced in this year's Budget and is being progressed.
	This open approach provides the opportunities for the users of the tax system to have genuine input, through consultation, in the shape of those changes and/or the way they are implemented. Taken together with other announcements already made in earlier PBRs and Budgets, there is a far more extensive rolling forward programme of tax simplification in the public arena than ever before, including under previous Governments, and there is greater opportunity than ever for business and others to become involved in shaping the tax system of the future.
	We believe that these new clauses are unnecessary. They would add little to an extremely extensive process of tax simplification. They would carry significant risks, associated with an absolute, definite requirement to publish or consult on every tax change before its introduction. I therefore ask the hon. Member for Runnymede and Weybridge to withdraw the motion.

Philip Hammond: I have listened to the Economic Secretary, and I am afraid that I will disappoint her. She says that the Government have 29 consultative tax groups and that they have had 38 formal consultations. One is tempted to wonder how they got it all so wrong if they have so much consultation going on and so many experts apparently at their disposal. The experts whom we talked to knew that it would all go wrong. They knew about the non-doms thing and that the capital gains tax regime needed to be amended. They saw the problems with the 10p tax changes. They understood that the proposed income-splitting rules were unworkable and that the foreign profits consultation could have led to something that was disastrous for Britain. Indeed, we have already begun to see the early effects, with the exit of one or two key companies from this country, as mentioned by my hon. Friend the Member for Billericay (Mr. Baron).
	The Economic Secretary said that simplification was a priority for the Government and that a significant rolling programme of simplification was in place. We understand how easy it is for Ministers to be briefed by civil servants and to read out what they are told, but as we now have the longest tax code in the world, and given the complexity of our tax code, does she really believe that an effective simplification programme is in place? She says that longer means simpler and easier to access. I wonder whether the Treasury has bought a share stake in Tolley's tax guide; I can think of no other reason for her to believe that statement. I urge my right hon. and hon. Friends and right-thinking Members in all parts of the House to vote in favour of new clause 17.

Question put, That the clause be read a Second time
	 The House divided: Ayes 190, Noes 267.

Question accordingly negatived.

Philip Hammond: I beg to move amendment No. 89, in schedule 3, page 127, line 5, leave out 'B,'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 90, in schedule 3, page 127, leave out lines 12 to 16.
	No. 91, page 127, leave out lines 23 to 25.
	No. 93, page 128, line 1, at beginning insert
	'In respect of qualifying business disposals within section 169H(2)(a) and (b),'.
	No. 92, page 130, leave out lines 31 to 36 and insert
	'(a) that during the period of ownership of the individual or from 6 April 2008 if later
	(i) the assets which (or interests in which) are disposed of have not been in use for the purposes of the business throughout that entire period, and
	(ii) only part of the assets which (or interest in which) are disposed of are in use for the purposes of the business,'.
	No. 88, page 133, line 21, at end insert
	'4A For paragraph 15 of Schedule 7D (taper relief on disposal of qualifying shares) substitute
	15 For the purposes of claiming entrepreneurs' relief on a disposal of qualifying shares, in applying sections 169I and 169S(3) the shares are treated as if they had been acquired when the original option was granted.'.
	Government amendment No. 29

Philip Hammond: This is a technical but important group of amendments relating to the detail of entrepreneurs' relief. The abolition of taper relief in the capital gains tax changes that were announced in the pre-Budget report sent a very negative signal to business and, as I said in the previous debate, provoked a ferocious response from business organisations. Indeed, it created what I think is a unique coalition of all the business organisations: the CBI, the EEF, the British Chambers of Commerce and the Federation of Small Businesses. I apologise to any others that I have missed, but they all coalesced in an unusual wayperhaps not surprisingly, given that they represent disparate types of business. Faced with that wall of opposition, the Government's tactics were, to put it bluntly, opportunistic. They decided to try to buy off the most numerous but least expensive group of opponents. I am thinking of very small businesses, which are largely represented by the Federation of Small Businesses.
	Let me be unambiguous: small businesses play a crucial role in our economy. Businesses that employ no one other than the principals or one or two people deliver a major part of the economic activity in our economy. Beyond that, small businesses play a crucial part in the social fabric of our society, and we support them entirely. However, the great majority of them are not going toindeed, have no aspiration togrow into large businesses. Many people establish small businesses as an alternative to other employment; running a small business gives them a different lifestyle and working style and the opportunity to succeed in a way that suits them.
	Some people, of course, want their businesses to become the next Microsoft, but many do not want that. For the economic future of the country, we do not need only small businesses, which provide the bedrock of our economy; we also need to foster small but scaleable businessesthose that have aspirations to grow, create substantial employment and raise ever larger amounts of capital. We need to be concerned about those businesses because of their importance in creating jobs and prosperity and because the entrepreneurs who establish themsuch businesses are often in high-tech industriestend to be more mobile, so the option of relocating overseas tends to be more realistic for them.
	When this debate first broke, I met a group of serial entrepreneurs. They had established successive businesses, built them up, sold them on and then started again. Some of them were quite youngin their 30s or early 40sbut already had a chain of business successes behind them. We have to encourage such people if we are to have a future in the globalising economy.
	I cannot remember the precise statistic, but a staggering proportion of our largest companies40 per cent. of the top 100, I think, although one of my hon. Friends may correct mewere not among the top 100 companies 30-odd years ago. There is a high degree of churn and innovation in the economy and we need those new businesses, which aim to grow and are constantly nurtured, to come through.
	The entrepreneurs' reliefthe Government's solution for buying off the protests of small businesses, the most numerous groupwill offer nothing of any significance to the entrepreneurs whom I have mentioned. Clearly, a serial entrepreneur who founds and sells business after business will not find the opportunity of a tax refund on the first 1 million of gain to be a significant incentive. The relief will, however, provide a break for those selling small businesses worth up to 1 million, and that is a welcome concession and U-turn by the Government.
	I shall not focus any more on the loss of taper relief, although we could debate its implications. I shall restrict myself instead to the restrictions that the Government have imposed on the entrepreneurs' relief that they offered in order to buy off opposition among small businesses to the abolition of taper relief. In Committee, concern was expressed by professional bodies and by people who run small businesses and who are likely to be affected. They said that, under the restrictions as they were drafted, some people, who on any equitable analysis looked as if they should get the relief, would be denied it. We had visions of all sorts of apparently perverse outcomes that would bring the measure into disrepute and create significant confusion.
	I therefore welcome Government amendment No. 29. I am sorry that the Financial Secretary is not here, but I offer my compliments to the Economic Secretary, who is here in her stead. In Committee, the Financial Secretary pledged to look again at the restriction that would have meant that if rent had been received at any time in respect of any asset that was the subject of an associated disposal, that asset would be ineligible for entrepreneurs' relief. An associated disposal is the disposal of an asset that is used in conjunction with a business, but is not owned by the business. To take a common model as an example, if a business owner who personally owns the factory building from which his business operates had at any time received rent from his own business for the occupation of that factory, it would not have been eligible for entrepreneurs' relief when an associated disposal took place alongside the disposal of the underlying business.
	In the case of many small businesses, the majority of the value of the global activity may well be in the associated asset, rather than in the business itself. That can be for all sorts of reasonsfrom security to the need to use mechanisms to raise finance. It is quite common for an asset, particularly a building, to be held in separate ownership. The measure would have been especially harsh for old, established businesses, for which any period of rent payment for such an asset at any time in the past would have led to disqualification of the asset. The measure was likely to have been particularly unfair to businesses such as farming, in which a separation structure is widely used; the people who own the land are often different from those engaged in the business of farming it.
	I am glad to say that the Government have taken our suggestion on board and disregarded all periods of ownership before April 2008 during which rent was received. They have therefore removed a potential anomaly that would have given rise to considerable unfairness. I am grateful to the Financial Secretary and the Economic Secretary for listening to the arguments and reconsidering on this occasion.
	However, we now have to address other issues. I hope that the Ministers have considered the arguments on those as well; they have not responded in the same way. The Opposition amendments in this group are aimed specifically at achieving clarification from Ministers on these issues, and we hope that we will hear a concise argument on why they are not prepared to accept the amendments. There are no politics in this. It is fair to say that, by and large, this schedule is as dull as ditchwater, but technical clarification is essential. Amendments Nos. 89 to 91 involve a housekeeping exercise that is of wider importance and touches on the debate that we have just had about how we make our tax law. I shall go into more detail on that in a few moments.
	The exception to the dull as ditchwater label is amendment No. 88, which deals with the treatment of share options under the enterprise management initiative. That initiative was set up by the Government to encourage people working in a business to own shares in it. It was aimed at helping high-tech start-up businessesas I say, that is exactly the kind of business that we need to fosterin order to attract the kind of people that they need if they are to grow. Those people might come from the academic sector or another business, but typically they could command high salaries and comfortable packages working in other sectors. The scheme was seen as a way of offering them a real financial incentive to take the risk of working in a far less certain and predictable environment.
	Under the taper relief regime, which has now been abolished, gains on disposal of enterprise management initiative shares were treated as if the acquisition of the shares had occurred on the date of grant of the underlying options. That favourable treatment was unique to EMI shares. It was designed to promote the EMI, because the Government had identified it as a beneficial measure to promote the growth of high-tech start-up businesses.
	Under the entrepreneurs' relief scheme, favourable treatment is no longer available, so a key benefit of the EMI scheme is removed. There is real concern that that treatment represents an abandonment of the Government's commitment to the EMI and, even worse, of their commitment to employee share ownership. The Economic Secretary will have the opportunity, when she stands at the Dispatch Box to reply, to be clear and unambiguous about the Government's commitment to the EMI and to employee share ownership more generally. If she asserts that the commitment will continue, she might explain why she has removed the key advantageous tax treatment that the taper relief delivered, and say why she thinks that potential employees would be tempted by EMI share options, given the lack of any favourable tax treatment.
	Amendment No. 88 was tabled more in hope than expectation. It would make EMI shares subject to the same treatment as pertained under taper relief. Its fiscal impact is likely to be very limited, because one of the criteria for receiving the entrepreneurs' relief is that a person must own 5 per cent. of the business in question. It would be very unusual for an individual to own 5 per cent. of the shares in an EMI company. It can and does happen, but we are by no means talking about hundreds of thousands of people. The Economic Secretary has the opportunity to send a strong signal about the value that the Government place on high-tech start-up businesses, and about the Government's commitment to the EMI scheme and employee share ownership in general. Concerns about that commitment are more salient than the concern about the treatment of EMI shares under the entrepreneurs' relief.
	Amendments Nos. 89 to 91 deal with associated disposals, as does Government amendment No. 29. The issue relates to the conditions that must be met if a disposal is to qualify as
	a disposal associated with a relevant material disposal.
	As I said, the stuff that we are dealing with is complicated. A relevant material disposal is a disposal of an interest in a business. A disposal associated with a relevant material disposal is the disposal of an asset that is used in conjunction with the business, but is not owned by the business. Before the disposal of that asset can be treated as a disposal associated with a relevant material disposal, three conditions have to be satisfied. They are set out in proposed new section 169K of the Taxation of Chargeable Gains Act 1992, which is inserted by schedule 3 to the Bill.
	To paraphrase, condition A is that there is a material disposal. Condition B is that the disposal is made as part of the
	withdrawal of the individual from participation in the business.
	Condition C is that the associated asset has been in use for the purposes of the business. There is no problem with conditions A or C; they are fine. The amendments would delete reference to condition B, so that any disposal of an assettypically a building or land, but possibly also intellectual propertyowned separately by an individual but used in connection with the business would be an associated disposal.
	The definition of
	withdrawal...from participation in the business
	gave us cause for concern in Committee. It is a bit of a woolly concept, and we foresaw that the provision would give rise to uncertainty, and ongoing problems as taxpayers struggled to understand whether they would be entitled to relief. However, the situation changed somewhat when draft guidance was published, and I am grateful to the Financial Secretary for circulating it. It helpfully defines what
	withdrawal...from participation in the business
	means. It says:
	A withdrawal from participation in the business concerned relates to the 'material disposal of business assets' which qualifies for Entrepreneurs' Relief...That is, it takes place when the individual reduces his or her interest in the assets of the partnership, or their holding in the company, as the case may be. It is not necessary for the individual to actually reduce the amount of work which they may do for the business.
	It goes on to give examples, which I will not read out. Withdrawal from the business is defined as occurring when an individual reduces his interest in the assets of a partnership, or his holding of shares in a trading company. In other words, if condition A is metif there is a material disposal of business assetscondition B, which is that the individual makes such a disposal as part of a withdrawal from the business, will always be met. Condition B becomes tautologous as a result of the definition of the term
	withdrawal...from participation in the business
	in the guidance notes.
	Before we had the benefit of the guidance, we thought that condition B was offensive, but we now see that it is merely otiose. It adds nothing to the provisions of proposed new section 169K. We arrive at that understanding not through the mechanism of amending primary legislation, which is what the group of amendments would do, but by relying on non-statutory guidance. I suggest to the Economic Secretary and the House that that is not a satisfactory way to proceed. I offer her the opportunity to tidy up by using amendments Nos. 89 to 91 to put in the Bill what she is saying through guidance. If she is good enough to confirm that my interpretation, and the interpretation of others who have looked at the guidance, is correct, and that condition B will always be satisfied when condition A is satisfied, she must come to the conclusion that condition B is redundant and completely unnecessary. I suggest to her that the position should be made clear not through a non-statutory definition of
	withdrawal...from participation in the business,
	but by deleting condition B. The Government addressed the substantive concern about condition B, but they did so in the wrong way. Making a condition self-fulfilling is not a satisfactory way to legislate. I am keen to hear the Economic Secretary's response on that point.
	Amendments Nos. 92 and 93 relate to restrictions on relief for associated disposals. The Government have dealt with the restriction where rent is payable in Government amendment No. 29. Other restrictions arise where the asset is in use for business for only part of the period of ownership, where only part of an asset is so used, or where the individual has owned the asset for only part of the period of business use. Again, guidance has been issuedCG64145and that clarifies the point. It indicates that HMRC officials will be encouraged to take a common-sense approach to the application of those restrictions and that in terms of interpreting what is a just and reasonable apportionmentthe test in the Billthey are being encouraged to make the apportionment on the basis that any reasonable person would think appropriate.
	My remarks on amendments Nos. 89 to 91 apply to some extent to this group of amendments as well. It is better that we have clarification in the guidance than not at all, but it would have been better still if it were in the Bill. However, in this case, the guidance does not render what is in the Bill meaningless or unnecessary, so the Minister can make her case for doing it in guidance if that is what she prefers.
	Amendments Nos. 92 and 93 have been largely answered by the delivery of the draft guidance note. I wait to hear what the Minister has to say about amendments Nos. 89 to 91 and also wait for reassurances in respect of amendment No. 88 and the Government's commitment to EMI schemes.

John Redwood: I remind the House that I have included in the Register of Members' Interests the fact that I am a director and a shareholder in a small company, but I do not wish to draw on that experience for the purpose of these remarks.
	I support what my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said about the need for the Government to listen carefully to those who say that the new capital gains tax regime is not as supportive of employee shareholding as it could be. I fully accept that the Government were well intentioned in wishing to get the main headline rate of capital gains tax down. I think that everyone in the House, with perhaps a few exceptions, is in agreement that that was a good thing to do. We were becoming very uncompetitive with the headline rate that we had, and it is good that the general rate is being reduced.
	However, it is most unfortunate, rather like the unfortunate idea of abolishing the 10p tax band to pay for the welcome lower rate of standard income tax, that in tidying up to try to pay for this measure, some of the rather good reliefs and opportunities that had been offered to entrepreneurs and to employee shareholders by the Government in previous Budgets were swept away, making the regime far less attractive.
	If I may draw on a personal experience from my past, I was involved in chairing a company that was financed by private equity where the incentive packages to individuals in the company were most important in driving recovery, profit and success for that investment. My experiences of that model and of talking to others who had been involved in private equity, including constituents of mine, persuaded me that there is a definite correlation between the success of British enterprise and the ability to reward and encourage people at all levels of an organisation with employee shareholdings so that they can participate in that success.
	I am therefore pleased that my hon. Friend tabled amendment No. 88, which would adapt schedule 7D so that some of the less generous terms that appear to be reflected in the reform of capital gains tax could be removed. Like him, I think that EMI is a good scheme, and I look forward to hearing the Minister explain how it might rest if his amendment, or something like it, were not introduced during the remaining proceedings on the Bill.
	Hon. Members on both sides of the House have come to understand how important small businesses, and smaller businesses led by people who wish them to grow rapidly, are to a successful enterprise economy. The Government's introduction of the taper relief and the 10 per cent. rate for enterprise undoubtedly gave a considerable fillip to enterprise and meant that a bigger population of smaller companies were able to grow more rapidly with people getting that direct incentive, which was then not going to be taxed at nearly such a penal rate as if the capital gains tax regime had remained unamended.
	I hope that the Minister will take some pride in what the previous Chancellor did for enterprise and venturing in that earlier regime, which was one of the best things that he ever did. I hope that she will accept my compliments in the spirit in which they are intended. It would be a tragedy if a subsequent Budget started to demolish some of that good work, perhaps inadvertently or because of cheese-paring. I will be interested to hear what the Treasury arithmetic is on all this. The first-round consequence of reducing a rate of tax may well be to reduce the amount of tax collected, but the second or third-round consequence of a more favourable capital gains tax regime may well be to generate more revenue. That would have been my conclusion had the then Chancellor reduced the overall rate, leaving in place the more favourable rates for enterprise. However, there is a danger that the disincentive effect of the cheese-paring with the smaller enterprise rates will offset the possible good effects of the lower overall rate, so that the estimates that we might otherwise have had of rising revenue from greater success will be nipped in the bud or we will find ourselves short-changed.
	I hope that in responding the Minister will understand that we are, as the Government were prior to this reform, very keen on these promotional measures, particularly for employee shares, which can be extremely important. I would like her to share some of the thinking about the arithmetic behind these measures. There is always the danger that a crude concentration on first-round effects to try to offset revenue loss will do much more damage in the medium to long term because it will limit growth in the British economy and limit the growth of any smaller companies, and we will end up with less revenue.

Kitty Ussher: I am grateful to hon. Members for tabling amendments in these technically complicated areas. It is important to use this stage of the Bill's passage to ensure that the meaning is entirely clear. I am sure that my right hon. Friend the Financial Secretary would want me to put on record her gratitude for the conversation in Committee that led to our tabling Government amendment No. 29. That was a useful exchange, and we are pleased about that.
	Let me run through the amendments in order and give the Government's response. Amendments Nos. 89 to 91 would make it easier for people to qualify for entrepreneurs' relief under the rules for so-called associated disposals, which are, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, disposals of assets which individuals owned personally but which were used in a business that the individual carried on either in partnership or through their personal trading company. As he said, to qualify as an associated disposal three conditions have to be met. The amendments would remove entirely the condition that the disposal of the associated asset must take place as part and parcel of the individual's withdrawal from the wider business.
	I suspect that that was not sufficiently clear in the guidance, so I will take the opportunity to clarify it now. It is of course draft guidance, so we can revisit it. The disposal mentioned in the guidance is the disposal of the associated assets rather than the withdrawing from the general business. Entrepreneurs' relief is targeted at disposals of businesses and it is right that there must be a clear link between the individual's disposal of his interest in the business per se and any disposal of an associated asset that he let the business use. The first condition for relief on an associated disposal is, therefore, that the individual makes a disposal of his interest in the business. The second condition follows naturally from the first condition, and it is that the disposal of the interest in the business and the associated disposal of the asset are exactly thatassociated.
	The hon. Gentleman says that the second condition is not clear. I do not agree, but it is a useful conversation to have. The condition sets out the factual test that must be satisfied. There must be a linkan association between the withdrawal from the business and the associated disposal of the asset. The House will want to know that the same condition existed in the rules for retirement relief and it did not cause any difficulty in that case.
	The hon. Gentleman said that condition B is always satisfied when condition A is satisfied. That is not the case, and perhaps he has misunderstood the guidance in this technical area. Condition B is not otiose. The disposal it refers to is the associated disposal, as I have said, so it is needed to establish the connection between the two disposals. That was the case for the old rules for retirement relief.

Philip Hammond: The Economic Secretary said that the guidance might be unclear. The guidance is very clear. I wonder whether she means that the wording of the Bill is unclear. The wording of paragraph 3 of proposed new section 169K states:
	Condition B is that the individual makes the disposal as part of the withdrawal of the individual from participation in the business.
	That may be where the ambiguity has crept in. The guidance note, however, is very clear:
	A withdrawal from participation in the business concerned relates to the 'material disposal of business assets'...That is, it takes place when the individual reduces his or her interest in the assets of the partnership, or their holding in the company.
	Where individuals make a material disposal in the assets of the partnership or the holding of the company, they will be withdrawing from participation in the business by definition.

Kitty Ussher: The disposal referred to in the Bill is the associated disposal, and the definition that the hon. Gentleman read out from the guidance is the definition of the wider withdrawal from the overall business. I think it best that if we need to alter the draft guidance following this discussion, we do so, but I hope that when he has had an opportunity to reflect on this exchange, he will understand our point.
	I am grateful to the hon. Gentleman for saying that amendments Nos. 93 and 92 have been dealt with by the Government amendments, so perhaps I can move on to amendment No. 88. This amendment seeks to extend entrepreneurs' relief to individuals who dispose of shares acquired under enterprise management incentive options before they have held the requisite proportion of shares, and voting rights in the company for shares, for the qualifying period of 12 months.
	I was asked whether the Government would take the opportunity to reaffirm our commitment to the enterprise management incentive and to employee share options and share ownership more generally. I would like to take the opportunity to do so 100 per cent. It is often extremely useful to align incentives for the work force with those of the overall organisation, and we have always sought to support that process.
	The crucial point is the difference between having the option to acquire a share and the owning of the share itself. Perhaps that will tease out the issue under debate. One of the conditions for entrepreneurs' relief to be available on a disposal of shares is that the company should have been the individual's personal company for a period of 12 months. A company is an individual's personal company if that individual holds at least 5 per cent. of the ordinary share capital of the company, and by virtue of that holding can exercise at least 5 per cent. of the voting rights in the company. Amendment No. 88 would make a company an individual's personal company at the time when he holds EMI options that would entitle him to 5 per cent. of the ordinary share capital, by treating the shares as acquired when he has acquired only the option.
	Entrepreneurs' relief is intended for individuals who have an active stake in the company by owning, throughout a qualifying period of a year, at least 5 per cent. of the ordinary shares, and by being able to exercise at least 5 per cent. of the voting power. Obviously, an option does not require voting power. I think that that is where the difference lies. Someone who holds only an option to acquire shares does not have the sort of stake in the company that should qualify that person for entrepreneurs' relief. The option does not confer the rights and liabilities of a shareholder, or voting rights, as I have said.

Philip Hammond: We have heard the Economic Secretary reaffirm the Government's 100 per cent. commitment to the enterprise management initiative, while stripping away the principal tax advantage of it. What is the incentive for individuals thinking of taking employment with EMI qualifying companies to take up share options? Where is the benefit?

Kitty Ussher: There are wider benefits than simply being able to have a different capital gains tax requirement, such as the way in which the company might be able to develop in future and the simple value of that asset, so that is quite clear. If someone acquires shares by exercising an EMI option and as a result the company becomes his personal company, a gain on a disposal of the shares will of course qualify for entrepreneurs' relief after he has held them for at least one year, assuming that the other conditions are satisfied. That is the same as for any other shareholder.
	People acquiring shares by way of EMI options continue to benefit from generous income tax and national insurance reliefs, which also answers the hon. Gentleman's point, and we increased the individual limit to 120,000 for EMI options from 6 April this year. There is also a technical defect in the amendment, but I have made my main point, and I urge that the amendment is not pressed to a Division. If so, it should be resisted.
	I have alluded to Government amendment No. 29. It relates to the capital gains tax and entrepreneurs' relief rules for associated disposals. The disposal of an asset may qualify as an associated disposal if the asset were in business use and disposed of alongside someone's withdrawal from a business. In the Public Bill Committee, my right hon. Friend the Financial Secretary, who has joined me on the Front Bench, explained that eligibility for entrepreneurs' relief may be restricted if the asset was only partly deployed for business use, or if the asset or individual was involved in the business for only part of the period in which the asset was used by the business. Relief may also be restricted if an individual received rent for the use of the asset by the business.
	That is a sensible way to focus the relief, as in these circumstances the asset is more akin to an arm's length investment. The Bill takes all payments of rent into account, even when rent was paid before the new rules were introduced on 6 April. When this particular point was touched on in the Public Bill Committee, my right hon. Friend said that she would consider the case for disregarding rent received before April 2008. We are now persuaded that that is the right approach to adopt, and having examined the matter, we have concluded that it is right to disregard rent paid before entrepreneurs' relief was introduced, in order to smooth the transition to the new regime. Amendment 29 delivers that change. I would like to move that it be part of the Bill, and I urge colleagues to resist the other amendments if they are pressed to a vote.

Philip Hammond: I am afraid that the Economic Secretary has not dealt with the issues that amendments Nos. 89, 90 and 91 raise. It may surprise her to know that I did not dream up the problem all on my own. If I doubted my ability to analyse the complex provision, I do not doubt that of others who have pressed the point. I have read and re-read the Bill in the light of the Government's comments. It states:
	Condition A is that an individual makes a material disposal of business assets
	and
	Condition B is that the individual makes the disposal
	which the Economic Secretary has clarified as the associated disposal
	as part of the withdrawal of the individual from participation in the business.
	The guidance notes make it clear that the satisfaction of condition Athat a material disposal of business assets has been madeconstitutes a withdrawal of the individual from participation in the business because it necessarily involves the individual reducing his or her interests in the assets of the partnership or their holding in the company. Condition B will therefore be satisfied.
	I do not believe that the Economic Secretary has made the case so I wish to place on record our concern that the matter could leave this place unclarified, and there is no other stage of the Bill's passage when it could be tackled. I therefore urge my hon. Friends to support the amendment.

Question put, That the amendment be made:
	 The House divided: Ayes 198, Noes 277.

Question accordingly negatived.
	 Amendment made: No. 29, page 133, line 26, at end insert
	 'Transitionals: section 169P(4)(d)
	5A Section 169P of TCGA 1992 has effect in a case where the period for which the assets are in use for the purposes of the business began before 6 April 2008 as if the reference in subsection (4)(d) of that section to that period were to so much of it as falls on or after that date.'. [Kitty Ussher.]

New Clause 3
	  
	Vehicle excise duty: variation of graduated rates for light passenger vehicles

'(1) The Treasury may by regulations made by statutory instrument vary the table in paragraph 1B (graduated rates for light passenger vehicles) of Schedule 1 to VERA (annual rates of duty).
	(2) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
	(3) The power conferred by subsection (1) does not extend to the ending of different provision for vehicles first registered after 1 March 2001 and before 23 March 2006 and with a CO2 emissions figure exceeding 185 g/km.'. [Justine Greening.]
	 Brought up, and read the First time.

Justine Greening: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	New clause 7 Vehicle mileage costs
	'The Treasury shall publish annually alongside the Pre-Budget report an estimate of the average cost of operating a motor vehicle (including associated running costs and depreciation) per mile for a vehicle driving 10,000 miles per year for
	(a) a vehicle registered before 1st March 2001 paying a pre-graduated Vehicle Excise Duty with an engine size 1549cc below;
	(b) a vehicle registered before 1st March 2001 paying pre-graduated Vehicle Excise Duty with an engine size above 1549cc; and
	(c) a vehicle registered after 1st March 2001 liable to pay graduated Vehicle Excise Duty in each of the VED bands A-M with effect from 1st April 2009.'.
	New clause 8 Fuel duties: rates and rebates: general fuel duty regulator
	'(1) HODA 1979 is amended as follows.
	(2) In section 6 (excise duty on hydrocarbon oil) after subsection (1A) (as substituted by section 11 of this Act) insert
	(1AA) In every Budget Statement and pre-Budget Statement the Chancellor of the Exchequer must provide a forecast for oil prices and set out anticipated yield from fuel duty and VAT on fuel for that price and for a range of prices up to 50 per cent. above his forecast.
	(1AB) The Treasury must, following each such statement, by regulations made by statutory instrument reduce the rates of duty specified in subsection (1A) in direct proportion to the increase in the costs accounted for by VAT.
	(1AC) Whenever international oil prices rise above the level estimated by the forecast made in accordance with subsection (1AA), indexed fuel duty increases shall not take effect until the international oil prices return to the forecast level or the forecast price is amended by the next Budget or pre-Budget Statement.'.
	New clause 9 Fuel duties: rates and rebates: road hauliers and remote rural areas
	'(1) HODA 1979 is amended as follows.
	(2) In section 6 (excise duty on hydrocarbon oil) after subsection (1A) (as substituted by section 11 of this Act) insert
	(1AA) In every Budget Statement and pre-Budget Statement the Chancellor of the Exchequer must provide a forecast for oil prices and set out anticipated yield from fuel duty and VAT on fuel for that price and for a range of prices up to 50 per cent. above his forecast.
	(1AB) The Treasury must
	(a) following each such statement, by regulations made by statutory instrument reduce the rates of duty specified in subsection (1A) in direct proportion to the increase in the cost accounted for by VAT;
	(b) provide a mechanism to pay the reduction directly to road hauliers with an 'O' licence including a restricted licence, a standard licence or a standard international licence;
	(c) bring forward proposals not later than the pre-Budget Statement 2008 to provide specific fuel duty reductions targeted at fuel sold in remote rural areas.
	(1AC) Whenever international oil prices rise above the level estimated by the forecast made in accordance with subsection (1AA), indexed fuel duty increases shall not take effect until the international oil prices return to the forecast level or the forecast price is amended by the next Budget or pre-Budget Statement.'.
	New clause 14 Remote rural fuel discount scheme
	'(1) The Treasury shall by regulations provide for the introduction, by no later than 1 April 2009, of a remote rural fuel discount scheme.
	(2) The purpose of the scheme is to provide a rebate on road fuel duty at qualifying retail outlets in qualifying areas to reduce the premium paid for fuel in such areas over the national average.
	(3) Qualifying retail outlets under subsection (2) are outlets located in qualifying areas meeting any criteria as defined under subsection (4).
	(4) Qualifying areas are remote rural areas as may be defined by regulations under subsection (4).
	(5) Regulations under subsection (1) may
	(a) specify the amount of the fuel duty rebate;
	(b) define remote rural areas;
	(c) define qualifying retail outlets, including any restriction;
	(d) specify how the rebate is to be applied, including
	(i) authorising HMRC to define procedures and conduct audits, and
	(ii) how any administrative costs are to be defrayed;
	(e) provide for it to be an offence for a person fraudulently to supply or sell rebated fuel other than as proscribed by these regulations;
	(f) provide for a system of registration of eligible retail outlets;
	(g) provide for the scheme to be administered in Scotland by the Scottish Executive and in Wales by the Welsh Ministers.'.
	Amendment No. 9, in clause 15, page 8, line 9, at end insert
	'(3A) In paragraph 1C (the reduced rate)
	(a) in sub-paragraph (1) for or C substitute C or D;
	(b) after sub-paragraph (4) insert
	(4A) Condition D is that the vehicle is an off-road working vehicle.;
	(c) in sub-paragraph (6) insert at the appropriate place
	off-road working vehicle means, subject to any provision which may be made by the Treasury in regulations made by statutory instrument, any vehicle which is used primarily for business purposes off adopted roads,.'.
	Amendment No. 7, page 8, line 21, leave out from 'to' to end of line 22 and insert
	'any licence taken out in respect of a vehicle first acquired on or after 13 March 2008.
	(7) In this section first acquired, in relation to a vehicle means acquisition when it has not previously been owned.'.
	Government amendments Nos. 22 and 23.

Justine Greening: Today's debate on the cost of motoring relates to issues that have relevance to the lives of millions of people, so the need to get the policies right is paramount. The Government announced in the Budget and have begun to deliver through the Bill a vehicle excise duty policy that is unfair and ineffective, and will make life harder for large numbers of people in this country.

Nigel Griffiths: If the policy is so unfair, why have five Conservative MPs on the Environmental Audit Committee stressed that it is a necessity?

Justine Greening: The hon. Gentleman has asked an interesting question. The answer is that we do not have a problem with graduated VED linked to the level of pollution of cars in principle. What we have a problem with is ineffective green taxation that is nothing to do with the environment and everything to do with eco-stealth taxes. If he is willing to stay in his place and listen to the remainder of what I have to say, I will carefully run through just how much the Government's policy on vehicle excise duty will affect the environment by 2020. If he thinks that that is not enough, I am sure that he will be happy to jump up and challenge the Government.
	New clause 3, which, among other new clauses, is what we are all here to debate this afternoon, aims to get the rising impact of motoring costs out into the public domain. New clause 3 seeks to protect people from the serious consequences of the Government's planned retrospective changes to vehicle excise duty. I shall outline a number of concerns about the effects that the Government's vehicle excise duty changes will have, many of which new clause 3 attempts to tackle.

Kate Hoey: I very much support what the hon. Lady is saying about the retrospective taxation of people who bought their cars expecting to pay just the normal increase. Will she say what the Government would have to say for her to withdraw her new clause?

Justine Greening: I will not be withdrawing my new clause, because it is the best insurance policy we all have to ensure that the Government tackle the situation. I will say later why it is important to resolve the issue today, rather than finding ourselves, this time next year, in another situation like the 10p tax rate fiasco, which we got rid of yesterday, only this time with vehicle excise duty.

Richard Burden: The hon. Lady used the word retrospective. I should like to be clear what she means by that. Is she saying that any increase in vehicle excise duty that applies to existing cars is retrospective?

Justine Greening: What I am saying is that the hon. Gentleman's Government should take the same approach that they took when they introduced band G. When they introduced a higher band for vehicle excise duty based on pollution, they said that it should apply only to vehicles already registered going forward. That was a fair way of ensuring that people would not be taxed for past behaviour that they could not possibly change. I am happy to explain in more detail why I think the Government's proposal is so bad and why so many of the hon. Gentleman's colleagues agree with us.
	There is no doubt that the proposed increase in vehicle excise duty will lead to a massive tax rise. The Treasury has admitted that its take from graduated VED will increase by more than 100 per cent. over the next few years. Figures released by the Treasury to me reveal that the take from graduated VED will increase from 1.9 billion in 2006 to 4.4 billion in 2010. I repeat: green taxes have to be offset by decreases in taxes elsewhere, precisely to ensure that families are not overburdened by tax at this time of economic hardship.
	I use the term green taxes loosely when describing the vehicle excise duty changes announced by the Government. One would hope that a tax increase of several billions of pounds would lead to some impressive vehicle emissions savings, but that is not the case. The argument that the changes will help the environment is simply not true. The Government have admitted that minimal emissions savings will result from the changes to vehicle excise duty rates. According to the figure that I have been given by Ministers, they expect annual emissions from motor vehicles to reduce by 160,000 tonnes a year by 2020. That is a fraction of 1 per cent. of total transport CO2 emissions, which were 120 million tonnes back in 2006, just one year.
	According to the Ministers sat in front of me, the long-term effect of the policy will be to change vehicle emissions by 160,000 tonnes a year by 2020. Did the Treasury concede that that is not a meaningful reduction? Did it promise to take a fresh look at the tax, to make it really work for the environment? No. Having released this statistic to me, its response was simply to repackage it. Instead of saying that it would involve a minimal amount each year, the Treasury tried to make it sound larger by saying that it would be 1.3 million tonnes by 2020. Actually, that is the total amount of emissions that will have been saved by the policy by 2020, yet, in every single year, there are 120 million tonnes of carbon dioxide emissions from motor vehicles.

Nigel Griffiths: The hon. Lady makes an excellent point, and it is reinforced by the latest report from the Environmental Audit Committee, which has been signed by, I think, a different five Conservative Members from those to whom I have already referred, although there might be some overlap. The Committee is ably chaired by the hon. Member for South Suffolk (Mr. Yeo). The report's overview warns of the danger of abolishing the fuel duty escalator and other issues. It also warns that, unless more drastic action is taken, the reduction that is being sought will not be achieved. What drastic action is the hon. Lady suggesting should be taken? Does she endorse what her five colleagues have said?

Justine Greening: I endorse what nearly 50 Labour Members have done, which is to sign an early-day motion saying that these retrospective tax rises are deeply unfair. The hon. Gentleman does a disservice to green taxation by supporting a green tax that is so unfair. How can we possibly change people's behaviour on the environment in relation to something that has already happened?

David Taylor: I should like to correct the hon. Lady. The early-day motion to which she referred does not say that several Labour Members believe that the retrospection is deeply unfair. It states:
	That this House is concerned at the retrospective effect of the vehicle excise duty changes announced in Budget 2008 to take effect from 2009; and asks the Government to reconsider.
	I am a signatory to the motion. The hon. Lady is wrong to say that it used the words deeply unfair, as they were not in the motion.

Justine Greening: The spirit in which the hon. Gentleman and I both believe that it is unfair to tax people because of the choices they have made in relation to motoring, in order to try to reduce emissions, is the same. There are clear similarities between us.

Peter Atkinson: May I give the House a practical illustration of the unfairness of the proposal? Many of my constituents drive second-hand cars, and the value of those vehicles has now been reduced by several thousand pounds because of this retrospective taxation. Those living in rural areas depend on their cars and have already been hit by higher fuel prices. They have also been hit at home by the escalating cost of domestic heating oil.

Justine Greening: My hon. Friend is right. The result of this change will be more dramatic for taxpayers than the result of the 10p tax rate fiasco. About 1.2 million drivers will experience a tax rise of either 220 or 245, which they could not possibly have foreseen when they bought their cars up to seven years ago. A further 1.1 million will see retrospective increases of up to 100, and possibly more, between 2008 and 2010. That will mean that twice as many people will be worse off by twice as much money as we were talking about yesterday in relation to the 10p tax rate fiasco.

Greg Knight: On the issue of fairness, has my hon. Friend seen the report by Professor David Newbery of Cambridge university, which I believe succeeds the report from Environmental Audit Committee that has just been mentioned? In it, he concludes that if motorists were to pay a full contribution towards the effect that their vehicles had on the environment, they would be paying fuel tax at a rate of 20p a litre. Is my hon. Friend aware that fuel tax is currently 60p a litre? Motorists are therefore already paying far more than their fair share towards the environment, without having to pay these increases in vehicle excise duty, which are clearly not a green tax but a stealth tax.

Justine Greening: My right hon. Friend makes an interesting point. If we are to reduce motor vehicle emissions, we clearly need more effective tools than the one that the Government have proposed in this year's Budget on the change to vehicle excise duty. Those who will be affected by the proposals are people with older cars, people with family cars and people on low incomes who simply cannot afford to upgrade to a less polluting car. What kind of policy creates a situation in which the owner of a new Porsche will face a smaller tax increase than a family with an older family car? It is clear that we need to revisit this decision.
	I want to focus for a moment on the most serious aspect of the retrospective part of this tax hikenamely, the impact on people on low incomes. From statements made by Ministers, and from the minuscule amount of data that I have received in answer to parliamentary questions, I understand that about 1.3 million people earning less than 15,000 a year will be hit by above-inflation increases in vehicle excise duty. Some of them will face rises of 245 a year. That is a week's take-home pay that the Government are going to take out of their pockets through this proposal. We believe that up to 750,000 of them will face increases that are triple the rate of inflation. It is completely unacceptable that these changes to vehicle excise duty should have a greater impact on those on the lowest incomes.
	Whatever hon. Members' view of graduated vehicle excise duty might be, we would all have hoped that the Government would be honest about what was being proposed. That was not the case, however. They have proved to be disingenuous about the facts from the word go. The retrospective element of the changes to vehicle excise duty were buried in the fine print of the Red Book. I am not sure how many families the Chancellor imagines read the Red Book, but I think that it would have been courteous, respectful and decent of him to tell them about these changes in his Budget speech. At the very least, he could have clearly described the change in the Red Book for what it wasa retrospective tax. But he did not have the decency to do that either. Instead, it was left up to readers of the Red Book to infer from table headings and dates that changes to road tax levels had been put into the Budget in this way.
	Another thing that was not mentioned in the Red Book was the transition period over two years for those worst affected by the changes announced in this year's Budget. I cannot help but think that that was introduced as an afterthought.

John Thurso: Does the hon. Lady agree that the primary objective of a truly green tax should be to change behaviour? Does she further agree that it is an essential principle of fairness in such a case that the people involved should be able to change their behaviour, and that the people whom she is talking about have no option and cannot change their behaviour?

Justine Greening: The hon. Gentleman is right. This goes to the heart of new clause 3. In spite of the fact that the Liberal Democrats voted for clause 15 of the Billwhich contained these proposals when we originally debated themI am pleased to see that cross-party consensus is now emerging on this issue, because it is important.
	I was talking about the fact that the retrospective element of the vehicle excise duty proposals had not been fully disclosed in the Red Book. Additionally, the Government have repeatedly claimed that the majority of motorists would be unaffected or no worse off because of these changes. That claim has been made on numerous occasions by the Chief Secretary to the Treasury, the Chancellor and even the Prime Minister, as well as by Treasury Ministers who are sitting in front of me today. They continue to make that claim to this very day, despite it being demonstrated again and again that it is simply wrong. In fact, by 2010, 80 per cent. of motorists paying graduated VED will pay more as a result of these changes. A total of 18 million motorists will face above-inflation rises.

Angus MacNeil: Of course, one point of the vehicle excise duty is to change people's behaviour, but as the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) pointed out, a change of behaviour cannot occur in every circumstanceand I am thinking particularly of crofters and farmers. Could the Government use the single farm payment as a mechanism for exempting crofters and farmers from this retrospective tax?

Justine Greening: The hon. Gentleman raises an interesting point. What I am trying to doI hope he will be pleasedis to ensure that nobody is hit by the retrospective element of the proposed tax rise. The reality is that the change will impact seriously on large numbersliterally millionsof people. Trying to hide it with a statistical sleight of hand, which is what Ministers have sought to do, is simply unacceptable.

John Redwood: Has my hon. Friend, like me, received many representations from people who simply cannot believe that this huge extra tax will be imposed on those with so little money to pay it? People are also worried that their older cars will plunge in value, making it difficult for them to sell and buy the newer sort of car that the Government want them to buy. Is it not surprising that we do not hear more from Members from all parties who should be representing the real anger that people are expressing?

Justine Greening: Like my right hon. Friend, I have received many representations. People up and down the country are, frankly, furious about being confronted with a tax rise that they have no way of avoiding. They will face it not just for one year; they will be locked into it for several years. As my right hon. Friend said, many people will be unable to afford to buy a new car because the value of their current car will have plummeted as a result of these tax changes.

Anne Main: Does my hon. Friend know whether the Government have done any calculations of the amount of value that will be wiped off numerous second-hand cars owned by lower-income families? What does she expect will happen to those older cars in that changed car market?

Justine Greening: A number of Members are expressing their concerns. My hon. Friend is absolutely right that it is unacceptable to introduce a retrospective tax in the Budget that people will be unable to avoid paying.
	I have tried to find out the real impact of the VED changes announced in this year's Budget. I have tried to do so by tabling numerous parliamentary questions and I have even gone so far as to write to Ministers on two occasions. Everyone is concerned to understand the impact of those changes throughout the country, but to this day no details have been released from the Treasury to the public to help them understand that impact. I have 18 outstanding parliamentary questions asking about which people will be affected and to what extent. I await answers from the Treasury. Many questions relate to the impact on low-income families and some are getting on for two months' old. I tabled them almost immediately after the Budget and the start of debates on the Finance Bill. I have written letters to the Financial Secretary, but I have received no replies whatever. Disagreement on policy is one thingit is part of the political processbut for Ministers to hold back the facts, bury their heads in the sand, exhibit a complete lack of transparency at every stage of the process and refuse to engage in a reasoned and informed discussion of the impacts of crucial policy decisions affecting millions of people is quite another and is simply unacceptable. It is a failure of the Government's duty to the House and to the people of this country.
	The problems with the VED proposals are clear. They mean huge tax rises; they offer virtually no benefit to the environment; they are unfair in backdating retrospectively; and they will hit families and people on low incomes. The proposed changes cannot be allowed to stand. That is why I tabled new clause 3. It is designed to send a simple, clear and strong message to Ministers that although green tax on cars can be imposed, it cannot be right to punish people with tax rises in respect of decisions they made in good faith up to seven years ago. The issues in the clause go beyond party politics.

Adam Price: Does the hon. Lady agree that even from an environmental perspective, this retrospective policy makes no sense whatever, particularly if its purpose is meant to be carbon reduction? It ignores the huge carbon cost involved in the purchase of a new car. It has been estimated that even a Toyota Prius has to run for 100,000 miles before it pays for the carbon cost of swapping an older car for a new car. It makes no sense.

Justine Greening: The hon. Gentleman makes a very fair point, and the Treasury has admitted that this proposal will have virtually no impact on CO2 emissions from motor vehicles in the coming years. What we need to do today is to put aside our political differences and do the right thing for the people most hurt by the Government's VED proposalsnamely, the public, families and particularly low-income families.

Nigel Griffiths: Will the hon. Lady give way?

Justine Greening: I have given way enough to the hon. Gentleman.
	I am asking Labour Members to do the right thing. What is more important to themstopping families and people on low incomes from going under financially in the coming months and years, or toeing the party line? That is what the decision on new clause 3 comes down to.
	If Members see no problem with the effects of the Government's policy of unfairly taxing people who cannot afford to pay, that is fine. If they can tell concerned constituents who speak of the pressures imposed by increases in tax and the cost of living that the Government's proposal went ahead and they voted for it, that too is fine. But if they cannot do those things, I think it worth remembering that our job here as Members of Parliament is to represent our constituents, and to give those people a vote. We have a chance today to send a message to Ministers that this proposal is wrong, and that they need to think again. We know from what followed the other great error of the Budget, the 10p tax rate fiasco, that they will listen if enough of us tell them that this simply is not good enough.
	We have been trying to make Ministers listen. Early-day motion 1464, tabled by the hon. Member for Blyth Valley (Mr. Campbell) and signed so far by 68 Members50 of them Labourexpresses concerns about retrospective increases in vehicle excise duty. Along with my colleagues who were members of the Committee, I have raised the issue again and again as the Bill has progressed through its parliamentary process. That process is nearing an end: the end will come today. We have all listened to the Government's explanations and excuses, and they do not stack up. The Government have not made their case, because there is no case to make. The time to correct this error is now.
	Of course, there is an alternative. I did not have to table new clause 3. I could have let the issue drag on, and it could have remained high on the political agenda until next year's Budget. That is what I will do if we cannot address this falsehood of tax rises now, but in the meantime I have tabled new clause 3 in a genuine attempt to correct the mistake sooner rather than later. It is better for everyoneincluding, I believe, the Government, but obviously the British people most of allif we can find a solution to this important problem now. Families need to plan for tomorrow, now more than ever. They need certainty in regard to what costs and financial constraints they are likely to face in the years to come.

Mark Fisher: I agree with the hon. Lady's criticism that a retrospective tax would be both unfair and ineffective, in that it cannot change a decision made four, five, six or seven years ago. It is an extremely unsatisfactory form of taxation. Any retrospective taxation is, per se, a very bad form of taxation, and I think the House should have no truck with it. But will the hon. Lady say something more about her solution? If retrospective taxation is, as I believe, an unacceptable way of levying taxes, so are statutory instruments, which are unamendable and are dealt with outside the Chamber.
	The hon. Lady understands these matters. I agree with her criticism, but her suggestion of a statutory instrument is an extraordinary and, I think, a very poor parliamentary solution. We never create serious taxation through statutory instruments, and in my opinion doing so constitutes an offence against Parliament.

Justine Greening: I understand what the hon. Gentleman has said. I tabled new clause 3 because I felt that it was better for us to debate the matter this year, and the new clause was the best way of enabling us to do that.
	I think we would all much prefer the Government to say today that they will not proceed with the retrospective element. What I am keenest to do, however, is give the House a voice, so that we can send a message to Ministers that we do not want their proposal to progress and we do not want to wait until next year's pre-Budget report to find out that it will be ditched. If that is to happen, we need it to happen now for the sake of the families who will be affected. I accept that my new clause may not be the most elegant, but it does give us a chance to have our say in this Parliament sooner rather than later. It would not be a complex matter to reverse the decision. It is not like the 10p tax rate fiasco. We know exactly what we need to do, and we can do it nowand we know how to do it, too, which is by voting for new clause 3. We agree with green taxes, but not with punishing people for decisions they made years ago and they are in no position to change.
	There have been two big problems with this year's Budget: the 10p tax rate fiasco and vehicle excise duty. We have corrected onewe know the Government will listen when forced to do soand we now need to correct the second.

Richard Burden: I believe that the Government do have some thinking to do in relation to VED, and I will explain some of the reasons why shortly, but there is absolutely no way I will vote for this new clause. It is incoherent. The hon. Member for Putney (Justine Greening) says that this is a simple matter, but it is anything but simple to work out the relationships between taxation on cars based on their performance and their contribution to combating climate change and the influence of those factors on customer behaviour.
	Even though I have some problems with the Government's proposals, I question the concept that what is being proposedregardless of whether it is good or bad or somewhere in betweenis retrospective. It is not retrospective. Why do I say that? We first have to ask why it is thought to be retrospective. The concept of retrospection is to do with time. Are we saying that any taxation levied on an existing vehicle is by its nature retrospective? We may agree or disagree with, let us say, either a flat rate or a graduated increase in VED, but they are not retrospective. From the point of view of the headlines, it is great to talk about this being retrospective taxation, but it simply is not.

Justine Greening: When the Government introduced new band G, they did so only for cars registered from the given date onwards. That is the difference between that change and the change and the new bands proposed now, which kick in not for cars registered from now on but for those that have already been bought, and bought by people who could never have known that they would fall into these higher tax bands.

Richard Burden: What the hon. Lady says about the introduction of that new band is absolutely true, but that does not make a different kind of increase that applies to existing vehicles retrospective. She may agree or disagree, but that does not alter whether or not it is retrospective.

Anne Main: To the public, this is semantics. Someone who bought a car seven years ago based their decision on how much it cost and whether they could afford to run it. Regardless of how the hon. Gentleman might wish to describe this, to introduce an additional cost seven years down the lineto cars that might be the family run-around, and which those families might be finding difficult to afford to run at allwill be seen by many people as retrospective, because those purchasers did not make the choice at the time to buy a higher-cost-to-run car.

Richard Burden: I have some issues with the proposed scheme, but although the hon. Lady is right in that the public will not go through the fine detail of what we are saying, it is important that we are straight with them, and that includes not calling something retrospective when it simply is not.

David Chaytor: Is it not the case that in every previous move towards variable emissions-based road tax, the changes have been levied on existing vehicles? That happened in the Budgets of 1999, 2002, 2003 and 2006. I do not recall the Opposition using the word retrospective, incorrectly, to apply to any of those previous Budget decisions.

Richard Burden: My hon. Friend is right, and that is why the hon. Lady was being very selective when she chose to refer only to the change that introduced band G.

Angus MacNeil: Is this tax a retrospective decision or not?

Richard Burden: No. Obviously, I am not making myself clear, because I am arguing that this is not a retrospective change.
	The key issue that we have to face is whether vehicle excise duty can be a useful way to combat rises in CO2 emissions. Given the interest in this debate, I am sorry that more hon. Members were not present yesterday when Julia King, of the King review, spoke to the all-party motor group and covered some of these issues. Some of the issues that arose were very interesting. The King review says that if people drive more efficiently, they can probably reduce their carbon emissions by about 15 per cent. It also says that if people choose the most appropriate car for their use, they could probably reduce their carbon emissions from transport by another 15 per cent. If they choose the most fuel-efficient car in the class of car that they use whether they drive a hatchback or a 4x4they can reduce their emissions by 25 per cent.
	Most cars in this country are not the biggest or most expensive. The volume is in the middle and small ranges, so if we want to have an impact on the contribution of road transport, especially cars, on CO2 emissions, we must do something about the middle and lower ranges.
	In the Opposition day debate on 14 May, I asked the Opposition spokesman if he believed that, in principle, vehicle excise duty should have a role in incentivising customer choice. He said that it should, but only in respect of cars not yet purchased. That is incoherent: it has not been the case before, and it is not the case now. VED rates already in existence apply to cars that people already own, not just those that they buy in the future.
	When people buy cars, they do not, by and large, buy new cars. Fleets do, but private customers tend to buy second-hand cars. Therefore, the decisions about the rate of vehicle excise duty should apply to existing carsthose that people own alreadyand not just to new ones.
	VED rates can incentivise people to embrace greener motoring in two ways. First, the incentive can be to buy a car with lower CO2 emissions. The second way is by influencing the decisions whether and when to change vehicle. The problem with the new clause is that it contains no incentive for people who already have cars with the highest emissions to change them. That is illogical, because the environmental performance of cars in all segments of the market is improving year on year. If, as some people suggest, taxation is weighted on to new vehicles and second-hand cars are exempted, people will be incentivised to keep vehicles that are less fuel-efficient, instead of changing to newer ones in the same class that are more fuel-efficient. As I said, the King review said that if consumers chose the lowest emission car in their class, they could reduce their carbon emissions by 25 per cent.
	Do such incentives work in practice? I would like to think that exhortations to save the planet would get us somewhere. In fact, some surveys suggest that it is not as simple as that.  What Car? did a survey on the impact of this year's Budget on whether people would choose a greener car next time they buy. The bad news is that 34 per cent. of people said no, the Budget would have no impact at all. However, of those who said yes 19 per cent. said that they would be incentivised to buy a greener new car because they felt that they were being encouraged to save the planet, while 47 per cent. of people said that they would buy a greener car because it would save them money. The economic aspects have an impact.
	Of course, there is a balance to be struck with affordability, and that is why I have some problems with the Government's proposal. The problem with what the Government have been doing does not lie in the principle, and Conservative Members are wrong to say that it does. There are problems with the detail and the phasing of the change. It is right to increase the number of vehicle excise duty bands to equate better with the environmental performance of vehicles, but there can be a Catch-22 for low-income families if the increases and the way in which they are phased are too steep. Someone cannot get rid of an existing vehicle and move to a more fuel-efficient vehicle if, as an Opposition Member mentioned earlier, the second-hand value of their vehicle is reduced to such an extent that they cannot sell it and buy a different one. However, if they do not sell their original car, they are still hit by the increase.
	There are issues with affordability and people's ability to pay. We must take on board the impact on families with children, who require bigger vehicles, on the disabled and so on. At a time where we have a difficult economic situation, with fuel prices making people think more carefully about the cost of motoring, the precise way in which the change is made needs to be rethought. However, the right way to do that is to think about the subject properly between now and the pre-Budget report and to consider the best way of achieving the objectives that we want to achieve, rather than having a knee-jerk reaction today.
	We need to look at how the economic circumstances of the time relate to what we need to do with vehicle excise duty. We need to look at whether we can tax things better, particularly when fuel prices are fluctuating as much as they are at the moment. We could consider some forms of incentives to stimulate more fuel-efficient driving. We could consider, for instance, doing something about reducing the motoring taxation of people who go on eco-driving courses, which exist these days. We could look at incentivising the fitting of dashboard displays that remind people how much fuel they are using and, if possible, what that costs. We could provide more obvious customer information, and the King review has proposed a number of examples of how we could do that. People need to understand what is being proposed, and when taxes are raised through motoring they need to be clearly hypothecated towards road transport and the kind of objectives that we want, such as improving the fuel efficiency of cars.
	Finally, we need to consider whether in the current climate it makes a lot of sense to maintain the price differential between diesel and petrol when diesel vehicles, by and large, are a lot more fuel-efficient than petrol vehicles. We need to think about how we can incentivise research and development into more fuel-efficient vehicles and put more money into investment in that R and D. That is why we need more thorough thinking on that matter and we need to take time to do it. That is why we have to do it in the pre-Budget report. It is completely wrong to try to bounce the view of the House and the public in an over-simplistic way, as the Opposition are doing today.

Jeremy Browne: I shall take the opportunity to discuss the full string of amendments and new clauses that all come under the title of Cost of motoring. So far we have had a narrowly confined discussion on vehicle excise duty, and although that is an extremely important issueit is probably the most high profile of the amendments and new clauses before usit is by no means the only one.
	I am talking about the cost of motoring as a whole. I suppose that the reasons it has become such a contentious political area and aroused so much public interest are threefold. First, there has been a dramatic increase in oil prices in recent months. Secondly, there is the issue of environmental taxation and whether the Government are applying it fairly, and thirdly there is a squeeze on household income, so people are inevitably more price-sensitive than at times when wages increase faster. To set the scene before I turn to the new clauses, I shall quickly go through each of those factors in turn.
	Supply and demand clearly drive oil prices around the world. It impossible to say at this juncture whether oil prices are spiking. We do not know whether we are at the beginning of a longer-term trend or whether prices will be higher or lower a year from now. All we can say with some certainty is that the trends appear to be upwards. That is a logical inference; one need only look at the number of two-car or even three-car households in the UK compared with 10 or 20 years ago. One need only consider countries such as China and India: in the big cities there, most journeys were undertaken by bicycle 20 years ago; now a large number of vehicles are being driven daily. There is clearly rising global demand for oil, and in the short term it is hard to satisfy that steeply increasing demand. People around the world are wondering whether it will be hard in the medium to long term as well. The problem is not unique to the UK.

David Davies: The hon. Gentleman is making a genuinely interesting point, but surely he is aware of what Ministers in OPEC are saying, which is that there is no problem in meeting the world's demand of 88 million barrels a day, and that the increase in price is due more to speculation. That suggests that his hypothesis that there is a continual upward trend is not correct.

Jeremy Browne: We will have to agree to disagree on that. It is very hard to increase production capacity dramatically in the short term, yet there have been increases.
	It might help the hon. Gentleman if I say that my hon. Friend the Member for Lewes (Norman Baker), who is a doughty campaigner on these matters, asked the Department for Transport a question and received a written answer on 25 June, a week ago. He asked about increases in petrol and diesel prices in all the EU countries. He was told the prices in January 2005 and April 2008, which was extremely helpful and interesting. They are a few months out of date, and of course prices have since risen further, but the trend between the beginning of 2005 and a third of the way into this year is interesting and informative.
	In that time, petrol prices rose by an average of 36 per cent. in the UK. That is a sharp increase, and markedly more than the increase in wages in that time. However, it is fair to say that in the comparable large economies of western Europe, the rises were even greater, although I acknowledge that they started from a lower base. In France, the rise was 51 per cent., and in both Germany and Italy it was 44 per cent. By April 2008, the UK no longer had the highest petrol prices in Europe. The average price of a litre of unleaded petrol was higher in Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal and Sweden.
	That is not true of diesel, for which we still have the highest price per litre in the EU, but other countries began to catch up with us in that period. The increase in the price of a litre of diesel in the UK was 39 per cent. I acknowledge that that is way in excess of the rise in income and means that people driving the same mileage are having a larger percentage of their overall household budget taken up by fuel costs than in January 2005. Nevertheless, it is reasonable to consider what has happened in other large western European economies and put on record the fact that prices went up by 60 per cent. in France, 56 per cent. in Germany and 52 per cent. in Italy.

Russell Brown: I thank the hon. Gentleman for giving way. I have written to two major supermarket chains and three major oil producers asking whether they can explain why the differential between unleaded petrol and diesel has risen to between 11p and 16p a litre, compared with between 2p and 3p a litre 18 months ago. Will he share with the House his views on why that may have happened?

Jeremy Browne: I am grateful for that intervention. I should declare an interest, in that my car has a diesel engine. Until about a year ago, I paid about 1p or 2p more per litre butand this follows on from a point made in the previous speechthe greater fuel efficiency of diesel meant that the mileage was greater and that the cost differential was almost zero. The cost of diesel is quite a lot greater now, as a result of higher demand and restricted refining capacity. However, that prompts questions about whether the Government should introduce additional incentives for people to switch to diesel-fuelled cars, and that is territory that I do not intend to venture into in this speech.

Russell Brown: I thank the hon. Gentleman for giving way again. Does he think that the Office of Fair Trading might look at this matter?

Jeremy Browne: I thank the hon. Gentleman for that question, but I do not want to be distracted, as I do not believe that the question is about the fairness or unfairness of trading; rather, it is about demand and oil producers' capacity to refine the product in the way that they need to if they are to bring it to market.
	The rise in the oil price is the first reason why the cost of motoring is a high-profile issue in the country at large at the moment. The second is environmental taxation, and I shall say more about that as it forms the basis of most of the new clauses and amendments under consideration. The third reason is the squeeze on household incomes. That is worth mentioning, as the sizeable rises in fuel costs in the UK and other EU countries that I have just set out have been accompanied by increases in food, utility bills and council tax. All those rises are happening at a time when the income of most households is being held down; in many cases, it is even not rising as fast as the official inflation rate, which itself is not in line with most people's experience. We are dealing with a live and important issue that will not go away. Unless the Government confront aspects of it today, I fear that they will find that their woes only accumulate.
	However, the Conservative record is also less than glorious. The hon. Member for Putney (Justine Greening) accused the Government of a complete lack of transparency when it came to environmental taxation. The Conservative party likes to give the impression that it is environmentally friendly. To Friends of the Earth, it emphasises its new-found environmental credentials, but its speeches to road hauliers are rather different.
	The leader of the Conservative party has put a windmill on his house, changed his party's logo to an image of a tree and bought some extremely expensive recycled trainers that used to be old tyres. That is the entirety of Conservative policy on environmentalism. If he thinks that that will cut the mustard, he needs to have a higher regard for the intelligence of people in this country.
	The speech by the Conservative spokesman, the hon. Member for Putney, contained a straightforward contradiction, and she may wish to intervene on me to clarify the point. She said that the Government were increasing the total VED tax take from 1.9 billion to 4.4 billiona sizeable increasebut she then said that the policy was not working, as it would lead to emissions savings by 2020 of only 0.16 million tonnes.
	The only logical inference from that observation is that the Government are not taxing fuel nearly aggressively enough. If the hon. Member for Putney believes that emissions are not being cut enough, and if she is in favour of environmental taxation, the presumption must be that she wants consumers to be even more incentivised to make greener choices.

Justine Greening: The hon. Gentleman seems to have completely missed my point. The tax is not having an impact on emissions because it taxes behaviour that has already happenedit is impossible for people to go back and change it. That is the primary reason for the tax not causing a greater decrease in motor vehicle emissions.

Jeremy Browne: The hon. Lady is right, of course. That is why we agree with the Conservative party. It has wisely come to agree with us on the need to give people real choices about the environment. However, we disagree with the Conservatives' attempt to hide from the electorate the consequences that would inevitably flow from their rhetoric. My party is in favour of differential VED rates, which were never introduced when the Conservatives were in government. The Conservatives seek to imply when they speak to environmental groups that they, too, want people to drive more fuel-efficient cars, but we do not hear a lot of that in their day-to-day discourse or in debates in the House.
	If the hon. Lady does not think that the Government's policy is doing enough to cut vehicle emissions, the logical position for her to take, which is my party's position, is that VED differentials should be greater for all newly acquired vehicles and should take account of engine size, which would offer people greater incentives to pick more fuel-efficient vehicles.
	This string of amendments contains some extremely interesting proposals about helping people who live in remote rural areas and about off-road working vehicles, and I am certainly disappointed that the Conservative party appears to take no interest in those subjects.

David Chaytor: The hon. Gentleman makes a plea for greater differentials for new vehicles, but is that not exactly what the Government are planning for 2010-11, when the most-polluting vehicles will pay an additional first-year charge of 950? That answers his point exactly, and he should congratulate the Government on doing that.

Jeremy Browne: That is what the Government are doing, but our view and that of the Environmental Audit Committee, which, as we were reminded earlier, is chaired by the only Conservative who is allowed to follow the logic of his leader's position on this matter, is that those differentials must be greater to achieve the environmental benefits that my party wishes to achieve. In other words, people must be better rewarded for driving more fuel-efficient cars.

David Chaytor: May I, as a member of the Environmental Audit Committee, correct the hon. Gentleman on that point? Our pre-Budget report last year called for an increase in the differentials on new vehicles. That is exactly what the Government have done in their Budget this year, as indicated by figures that appear in the Red Book. That response exactly deals with his plea for greater differentials on new vehicles in the future, so will he congratulate the Government on doing what the Environmental Audit Committee called for?

Jeremy Browne: I will give way again if the hon. Gentleman can answer this question: did the Government introduce differentials as big as those recommended by the Environmental Audit Committee?

David Chaytor: The Environmental Audit Committee did not recommend any size of differential; it gave an indicative range that is broadly reflected in the higher band figure that the Government have introduced.

Jeremy Browne: We are in danger of going into a cul-de-sac. Everyone says that they are in favour of differential VEDso we can agree on thatbut the question is how big those differentials must be to achieve environmental benefits. My view and that of my party is that they need to be bigger than Government propose and that they should not be imposed retrospectively.

Alan Simpson: Let me try to help the hon. Gentleman and other hon. Members out of the cul-de-sac. Is not the great weakness of the Government's position and the proposals before the House that the issue is not about what happens in relation to progressive VED on new vehicles, but about how we change the performance of existing vehicles and the behaviour of those who own them? In that sense, there is nothing green about either the Government's position or these proposals. A greening of behaviour can come about only if there is some form of hypothecation of the taxes raised by the measure to allow and equip people to change the engine types of their vehicles to adopt lower pollution standards. Hypothecation is absent as a mechanism to allow existing vehicles owners to become lower carbon contributors in the economy that we are trying to construct.

Jeremy Browne: That was an extremely widely worded contribution. I do not disagree with it, but I fear that I would end up in many different areas if I tried to answer it in detail, so I shall try to answer it during the remainder of my contribution.
	My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has tabled new clause 14, which deals with the remote rural discount scheme. I hesitate to intrude on the cosy metropolitan consensus that exists within ministerial ranks, but it is worth explaining to the House that in many parts of the country it is hard to use modes of transport other than the car because there is very little public transport. People use their cars not for leisure purposes, but for everyday purposes such as travelling to work. My hon. Friend will explain the proposed effects of his new clause in greater detail, but I urge the Government to look sympathetically on the circumstances of people who live in remote rural areas where there is no alternative to the private car.
	The particularly interesting aspect of my hon. Friend's new clause is the provision whereby he seeks to enable the devolved Administrations in Scotland and Wales to implement and administer the scheme. That would be an interesting way for the Scottish National party in particular to demonstrate its commitment to such matters.

Russell Brown: New clause 14(5)(b) says, define 'remote rural areas'. I appreciate that the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) will speak to the new clause, but would the hon. Member for Taunton (Mr. Browne) care to share with the House his vision of exactly what remote rural areas means?

Jeremy Browne: They would have to be remote and they would have to be rural. The new clause deals precisely with that question, but as I am not the person who tabled it, it seems only fair and reasonable that the Member who did, my hon. Friend the Member for Caithness, Sutherland and Easter Ross, should deal with it in detail.

Andrew Selous: The hon. Gentleman talks about issues in remote rural areas, but does he agree that even in urban areas where there are good bus networks, owing to the distances that many people travel to work and their shift patterns, there often are no buses, so the car is not a luxury and more people will be on the dole if the measures in the Bill go through?

Jeremy Browne: I agree up to a point. I accept that many people use their cars in their everyday lives to take their children to school or to go to work, and that the car is not an option that they can easily drop even in some urban or suburban areas. I was only making the pointmy hon. Friend will no doubt make it at greater lengththat the situation is particularly problematic for people who live in remote rural areas, because less public transport is available, the distances travelled are typically longer and the price of petrol and diesel is often higher because of the cost of transporting it to those areas in the first place. There are particular concerns in remote rural areas, but in the spirit of consensus, there is a question about quantifying and qualifying who and where would be eligible for the discounts. That is the nub of the debate, and it is probably more appropriate if my hon. Friend leads it.

Alistair Carmichael: In an area such as the west side of Shetland, which by anyone's definition is remote, rural and very sparsely populated, having scheduled bus services running around with nobody on them does not make environmental sense. In such an area, the private car is the environmentally sensible option.

Jeremy Browne: I have a lot of sympathy with my hon. Friend's point; he knows that part of the country better than I do. We have all observed that bus services can be underused, but I will avoid getting into a debate on buses, because that might take us too far off the beaten track.
	Amendment No. 9, tabled by my hon. Friend the Member for Argyll and Bute (Mr. Reid), deals specifically with off-road working vehicles. Let me touch briefly on that issue, which is also important. We are not talking only about farming vehicles; I shall give an example of the sort of company that would be affected. My constituency stretches right out into west Somerset and on to Exmoor, and it has a sizeable number of buildings that are not on mains water or mains sewerage systems. Companies go to such farms or remote cottages to fit sewerage and water systems for purification and to update the systems. Such buildings are often in inaccessible areas and those companies enable people to live there.
	Such a company would not qualify for the discounts on fuel for which farming communities might be eligible, but it would still need off-road vehicles to get to remote rural farm houses or other dwellings, particularly during the winter. I will allow my hon. Friend the Member for Argyll and ButeI should say that you will allow him, Madam Deputy Speakerto speak about the issue later. However, as I understand it, we are talking about a small and tightly defined number of people who need vehicles with a greater off-road capacity to carry out their business. The vehicles that are suitable and necessary for that work incur higher costs; it is therefore only reasonable to seek to mitigate those costs.
	I shall go quickly through two other issues. New clauses 8 and 9, tabled by the Scottish National party, can be seen jointly. My hon. Friends and I have some sympathy with the motivation of the new clauses; as I said, pricesespecially of essential products such as food and fuelhave increased dramatically and squeezed family budgets. Petrol and diesel are essential products in rural communities. I have expanded on that point already and it is inescapably the case that a large number of rural communities are in Scotland. I understand why many of my hon. Friends who represent Scottish constituencies and MPs who represent other Scottish constituencies have a particular concern about these matters.
	However, there are problems with new clauses 8 and 9. The Scottish National party appears to want to send out the signal that it is in favour of cutting petrol duty. I cannot see any intention behind the new clauses other than one to signify to the people of Scotland that the SNP wishes to help them at a time of rising petrol and diesel prices. However, if that is what it wishes to do, I have to ask SNP Members why they do not say it overtly. The Government can already make those changes. Why do SNP Members not ask the question about who should pay for them?

Stewart Hosie: We will answer the question of who pays for them when we move the new clauses. Why is the hon. Gentleman making these idiotic partisan comments? The issue has nothing to do with the Scottish National party in the run-up to some election that is two years away. It is about recognising the real increases that people are facing now. It is to do not only with Scotland, but with the whole of the UK. Will the hon. Gentleman withdraw his pathetic, partisan comments and listen to the argument and some of the evidence before he makes his decision?

Jeremy Browne: I simply do not know what provoked that intervention. I did not mention an election. In fact, far from being partisan, I acknowledged that there were particular concerns about petrol and diesel prices in rural communities, and that as large areas of Scotland are rural, those concerns must be felt keenly there. I could not have been less partisan; I was making an entirely conciliatory point. However, if the hon. Member for Dundee, East (Stewart Hosie) invites me to be partisan, I will be a little more partisan. Cutting 2p off pump prices costs the Government about 1 billion, so if the Scottish National party wishes to send the electorate in Scotlandor the motorists of Scotland; let us take elections out of it altogetherthe message that the party wants lower prices at the pump, it needs to answer the question: how will it fund those cuts? To be fair, that is a question that all parties in the House have to answer. I read in the newspapers yesterday that, behind the scenes, the Secretary of State for Business, Enterprise and Regulatory Reform is lobbying the Government to defer the 2p increase in petrol duty that is planned for the autumn.

Angus MacNeil: Will the hon. Gentleman give way?

Jeremy Browne: I will in a moment. The Conservative party seems to be facing both ways on the issue; the shadow Chancellor supports  The Daily Telegraph campaign to defer the 2p increase, but the party has not yet announced how it will make up the 1 billion shortfall that will result from that cut. The Conservative party has said that the proceeds of all its environmental proposals will go towards a family fund. As a result of the shadow Chancellor's intervention, that fund would already be 1 billion in deficit. That would have severe implications for families across the United Kingdom, if they were unwise enough to give the Conservative party a position of responsibility.

John Redwood: Will the hon. Gentleman give way?

Jeremy Browne: I will, shortly.  [Interruption.] I will, but let me make some progress.
	The more charitable explanation is that the Scottish National party is seeking to devise a mechanism that will address spikes in oil pricesa laudable objective. However, in their new clauses, SNP Members do not address the issue of what would happen if prices were to fall. If they were being more straightforward, they might say, Here is a mechanism for artificially inflating petrol prices in the event of prices falling. If they are not willing to say that, all that they are saying is that the mechanism is about cutting prices. They have not yet said how they will address the issue of a price shortfall, but they may do so later.

John Redwood: Will the hon. Gentleman give way?

Jeremy Browne: I will, in a second.
	SNP Members are considering the issue of oil revenue as though it were in a silo. About four hours ago, the Prime Minister made the point in the House that in any economy there will be revenue streams that go up and are higher than the Treasury anticipates, and revenue streams that fall, or go up by less than the Treasury had anticipated. The Treasury has to consider the public finances as a whole. If a Government ring-fence every area where revenue has risen by more than was anticipated, and say, We must artificially reduce that, but do not seek to ring-fence any areas where the revenue is less than expected, they will end up with an overall revenue shortfall.

Angela Eagle: indicated assent.

Jeremy Browne: I see the Minister nodding; it is an obvious point to nod at. Anyone who can add up will work out that what I am saying has to be true. I do not see how anyone could regard it as anything other than a statement of the obvious, and if I have detained people by stating something transparent and obvious, I apologise.

Angus MacNeil: Is the hon. Gentleman aware that fuel is 30p a litre cheaper in the Republic of Ireland, which has a budget surplus?

Jeremy Browne: I have mentioned countries where the price of petrol is higher than it is in the United Kingdom; I could also mention countries where the price is lower. That is a choice that Governments have to make. If the SNP does not want to cut public spendingI have not heard it make any proposals for such a cutit needs to try to raise the revenue elsewhere. Howeversurprise, surpriseI have not heard any proposals on how that revenue would be raised.
	My final point on the Scottish Nationalist party amendments is that the Government have this mechanism in a rather cruder form already. One of the issues in this debate is whether the Government wish to implement, further defer or cancel altogether the 2p duty rise that is planned for the autumn. One of the considerations that they are presumably taking into account is the overall price of oil and the effects on businesses and private individuals. The Government already have the ability, if they so wish, to vary upwards or downwards the total amount of duty on petrol and diesel depending on wider economic considerations and the price of oil, without having to introduce a mechanism of this sort.

John Redwood: Will the hon. Gentleman give way?

Jeremy Browne: When I have finished this point.

John Redwood: In a second, I suppose.

Jeremy Browne: Honestly, nobody has spent more time in Finance Bill discussions this year than I have, and there are some Members here who I have not even seen so far. However, I am more than happy to give way to all of them.
	The motivations behind new clauses 8 and 9 are in many ways laudable, and I share many of them, but there are all kinds of practical problems that would be insurmountable.

John Redwood: The hon. Gentleman's comment was clearly not directed at me, because we were debating together yesterday in this very Chamber. His memory is obviously very short.
	Will the hon. Gentleman withdraw the idea that we would be short of 1 billion of revenue if we made this adjustment? Is he not aware that there was a 500 million increase in oil and petrol revenues in the first six weeks of this financial year alone thanks to the increased price, increased VAT and increased oil revenues? Surely it would be right to try to get back to the Budget estimate.

Jeremy Browne: That is not the position of those on the right hon. Gentleman's Front Bench, but he has a long record of having different positions from his Front Bench, even when he was sitting on it, so I will not criticise him on this occasion. The Conservatives' position, as I understand itit is hard to understandis that they would introduce additional environmental taxes over and above those being implemented by the Government, so the starting point is where the Government are. From that starting point, the Conservatives are seeking to put a 1 billion annual hole in their budget for families, so that is the initial deficit that they need to overcome.
	FinallyI have been speaking for longer than I wished to because I have been so generous in taking interventionsI want to discuss amendment No. 7 and new clauses 3 and 7, tabled by the Conservatives. My party takes climate change extremely seriously and always has, and we wish to achieve reductions in emissions from transport. Environmental taxation clearly has a vital role to play because transport contributes to a large degree to the total amount of CO2 emissions. Tax can make a contribution to changing behaviour. That is surely the Government's motivation, in addition to revenue-raising motives, in increasing tobacco taxation so that the taxation component is a high percentage of the overall price that the consumer pays when buying cigarettes and tobacco products. We support vehicle excise differentials and would support their being at a higher level so that consumers are even more incentivised to buy more fuel-efficient cars.
	I agree that environmental taxation has, to a sizeable degree, been discredited by the approach that the Government have taken. They have used public concern about the environment and climate change as a way of raising additional revenue. I do not doubt that they are concerned about climate change, as are politicians in all parties. However, people are understandably cynical when the Government see an opportunity to raise additional revenue based on those concerns without that money then being used to offset and reduce other areas of taxation so that the overall effect is neutral but the environmental taxes form a greater overall component of the total Government tax take. That would be a responsible way for the Government to progress, but I am afraid that it has not always been their approach.

Mark Harper: The hon. Gentleman was talking about the overall impact. Have he and his party reassessed their views about the correct level of vehicle excise duty, and taken into account the fact that because of the significant rise in oil prices and the subsequent rise in petrol and diesel prices, motorists have changed their behaviour, reflecting those costs? To have the same increase in VED without taking into account fuel prices does not seem sensible.

Jeremy Browne: That was a helpful intervention. The position of my party is one of greater vehicle excise duty differentials, so that people who choose to drive very fuel efficient cars, or moderately fuel efficient cars, will benefit financially. Those who chooseand it is entirely their choice, which is why we are against the retrospective aspect of the Government's proposalsto drive more fuel inefficient cars will have to pay a higher premium. But the additional revenue that we raise from that would be used to reduce taxes on individuals, specifically income tax. People would be paying more through environmental taxation, but less through income tax. The overall impact would be zeroit would be entirely revenue neutral. We believe that the proportion of taxation raised through environmental taxes ought to be higher and that the proportion of taxation raised on income ought to be lower.
	I shall broaden that point momentarily. Our long-term objective is to abolish vehicle excise duty altogether. Ultimately, we want a system of motorway and trunk road pricing, where people pay for their use of major highways. That would be particularly beneficial for rural communities, which typically do not have motorways and trunk roads, and would allow us to reduce other, rather cruder forms of taxation on cars. However, given the nature of the current system, we favour greater differentials.
	I shall conclude by talking about retrospectivity. People with older cars will be hit by the retrospective element of the proposals. It has been said by others that those people cannot easily sell their cars, and because it is harder to sell those cars, the market has corrected itself and the price of those cars is coming down, meaning that their problems are compounded further. Green taxes should incentivise people to make environmentally friendly choices, and people cannot be incentivised to make a different decision from the one that they have already made.
	My party does not wish to get into the territory that the Conservatives have sought to occupy, which is to talk green but always vote against the green option. I want to make it absolutely clear that the Liberal Democrats are committed to changing behaviour and mitigating the effects of climate change by introducing environmental taxes that form a greater component of Britain's overall tax take. But we will not increase taxes overall; we will reduce them on income, and the overall effect will be absolutely neutral. We do not favour retrospective VED, but we do favour greater VED differentials. On that basis, we will support amendment No. 7

David Chaytor: Will the hon. Gentleman give way?

Mark Fisher: Will the hon. Gentleman give way?

Jeremy Browne: I am bringing my remarks to a close.
	We support amendment No. 7, which stands in my name. If new clause 3 is pushed to a vote, we would be willing to support it, although it is deficient, particularly in the introduction of the element of a statutory instrument mentioned by the hon. Member for Stoke-on-Trent, Central (Mark Fisher). Although it is badly drafted, it is better than the Government's current position.

Several hon. Members: rose

Madam Deputy Speaker: Order. Several hon. Members are hoping to catch my eye, but apart from this important group of amendments, further groups of new clauses and amendments are to be debated today.

Ronnie Campbell: The debate has been pretty good up until now, and the retrospective bit is interesting. It is a good argument to say that if a car is 10 years' old, it should be taxed the same as one that is one year old. That is fairif we tax a car, it does not matter how old it is, it should be taxed. In that respect, the argument is a good one.
	However, the argument that I want to put up is for the working-class man or woman who drives a car. The tax is heavy, no matter how we put itenvironmentally or in any other way. It means 250 to 300 on second-hand cars, which are bought, in the main, by working-class peoplepeople who workbecause they cannot afford new cars. Only Labour Members of Parliament can buy new carsI am sure that Liberals and Tories buy them, tooand we can afford to pay the tax.

Angus MacNeil: The purchase is not usually based on the model, but on the cost of the car to the purchasers at that point, after which they can be hammered by vehicle excise duty.

Ronnie Campbell: I accept that point. However, let us get down to the nitty-gritty. The decision is similar to that on the 10p tax rateI do not want to go on about that too muchbecause it was a tax on the poor. It was a tax on pensioners and working people and it had to be taken away quickly because all hell was let loose. Again, we are considering a tax on working-class people. If we get into the same position as we were on the 10p rate and there is another mighty fiasco, we might have to withdraw it. It does not apply till April, so we, as a Government, have a chance to put it right.
	As I have said, we are considering a heavy tax on working peopleand not only those in rural areaswho need the car to get to work because our transport system is not that good. It is a retrospective tax, if people want to call it that, on working people. We should look at the matter carefully. The Government argue that they will examine itI hope that they do. I will vote with the Government, with a heavy heart, in the hope that they come up with something in the autumn statement that will give the working-class people of this country a bit of a break.

Alan Reid: I apologise to hon. Members for rushing off after my brief speech, but I have an Adjournment debate in Westminster Hall at 4.45 pm.
	I want to concentrate on amendment No. 9, which would allow a lower rate of vehicle excise duty for vehicles that are used primarily for business purposes off-road. Although I fully support giving people incentives to buy less powerful cars through higher rates of VED, there should be an exception for people who need to use the car off-road. I am thinking especially of farmers, gamekeepers, crofters and people who work in forestry. They use the car off-road and need a powerful vehicle to drive on muddy tracks to go about their business. They obviously cannot afford two carsone for work and one to take the children to school, go to the village for shopping or tow loads on the public roads. It is therefore important to charge people in that position a lower rate of duty.
	Amendment No. 9 builds on an amendment that the hon. Member for Dundee, East (Stewart Hosie) tabled in Committee, and I believe that it deals with much of the criticism that was made of the latter by restricting the exemption more to vehicles whose primary purpose is to be used off-road for business. Vehicles that are used purely for agricultural purposes are exempt from VED, but we are considering those that are also used on public roads and are therefore not exempt. The new class of exemption should be included.
	Let me deal with the proposals of the hon. Member for Dundee, East. Two issues need to be tackled. The first is the need for a lower rate of fuel duty to be charged in rural areas and the second is benefits for the haulage industry. Although I would happily support a proposal that was targeted more at the haulage industry to give it help and allow it to compete on level terms with Europe, new clause 9 is too widely drawn. To help people in rural areas, we should support new clause 14, which my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) tabled. It is targeted at charging a lower rate for fuel in remote rural areas. To give an example, I recently paid a visit to Port Ellen on the Isle of Islay in my constituency, where fuel was selling at 15p a litre more than at Glasgow airport. Indeed, on some of the smaller islands there is always a greater difference.
	Those additional costs work their way through the whole economy. We know that the price of fuel adds to the price of all other goods. High fuel prices make it more difficult to run and sustain a business in remote areas. People in those areas suffer from a triple whammy. Fuel prices are much higher than in urban areas; they have no alternative forms of public transport; and they have much further distances to travel. It would simply not be sensible for councils to subsidise bus services as an alternative, as buses would be running round with one or two passengers.
	The cost to the Treasury of new clause 14 would be very smallmuch smaller than the cost of the amendment proposed by the hon. Member for Dundee, Eastbecause it would apply only to a small part of the country. Cutting the price of fuel would not encourage people to drive more. People do not drive dozens of miles along twisting single-track roads because they enjoy it. They make such journeys because they have to. The car in such areas is not a luxury; it is essential. We had a meeting with the Exchequer Secretary in which she was sympathetic, and I know that the Chancellor is sympathetic, too. I urge the Government to accept our new clause.

Mark Fisher: I hope that not a single Member of the House would dispute the need to increase vehicle excise duty on engines of such a size. To that extent, the Government ought to be congratulated on listening to the Environmental Audit Committee and on increasing the VED on such vehicles. It is interesting that that is the dog that has not barked in this debate. Nobody has congratulated the Government on raising VED on future purchases, but they ought to be congratulated, because that is the right way for this country to go.
	However, the hon. Member for Putney (Justine Greening), speaking for the Opposition, was completely right to say that the change is retrospective. We can have a semantic argument about exactly what that change is, but she was right that although the increase is right for decisions made going forward, it is not right that a decision someone made five or seven years ago should also be subject to such an increase. That is unfair and retrospective, as well as being ineffective, because it does not change behaviour by making anybody who is considering buying a larger vehicle think twice before they do so. That is what the increase in duty is meant to do.

David Chaytor: When this or any previous Government have changed the rate of stamp duty, for example, which happens from time to time, has any Member suggested that the new rates should apply only to new houses? Of course not.

Mark Fisher: I very seldom disagree with my hon. Friend and I have a great deal of time for him, but he is completely wrong. We are talking about changing behaviour through the increase in VED, which is very different from stamp duty on houses. The increase is retrospective and principled, but it is not pragmatic because it will not change behaviour.
	The hon. Member for Putney has won the argumentwe ought to listen to thatbut she has lost the solution. It is the worst possible precedent for this House to start passing taxation legislation by statutory instrument. Nothing could undermine parliamentary democracy more than that.

Jeremy Browne: I would be grateful if the hon. Gentleman could say whether he supports my amendment No. 7, on the basis that it seeks to achieve the effect that he desires, but without the statutory instrument being required.

Mark Fisher: I have to confess that I have not read the hon. Gentleman's amendment, so I am at a loss.

Jeremy Browne: I should have spoken for longer.

Mark Fisher: Yes, I was interested that the hon. Gentleman did not speak to his amendment very muchindeed, I do not think that he mentioned it, and I would have been grateful to have had it brought to my attention earlier. I will go away and read his amendment afterwards, but I cannot respond now.
	The hon. Lady's solution would set the worst possible precedent. We should not start making changes to taxation by statutory instrument. We do far too much by statutory instruments as it is. Such provisions are not amendable and they do not come before the House. That is a growing and pernicious development in our democracy. A mechanism that was intended purely for implementing agreed legislation is now being used, in effect, as primary legislation. It would be a disastrous step to take a big decision such as thisalbeit a right oneby statutory instrument.
	The hon. Lady has won the argument, but lost the solution. The House must choose tonight between a correct but unsatisfactory solution, and trustingor hopingthat the pre-Budget report will show that the Government have listened to what is almost a unanimous view on this point.

Andrew Smith: My hon. Friend makes a powerful point about how bad it would be to use a statutory instrument for this purpose. Is not the political reality that the extent of concern among Labour Members about the unfairness of this imposition on low-income families with older cars is such that the Government are going to have to look at the impact of motoring taxation in the round? As my hon. Friend suggests, the right way to do that is for them to come back to us in the pre-Budget report, and all Labour Members will expect our right hon. and hon. Friends on the Front Bench to do that.

Mark Fisher: My right hon. Friend is right. He used the word expect, but I think that there is an element of hope involved as well. However, this action must be required of the Exchequer Secretary. She might not be able to give us a categorical undertaking tonight, but I believe that she has heard hon. Members very clearly indeed. If the Government do not reconsider this matter in the pre-Budget report in the way that my right hon. Friend has suggested, the House and the people of this country will be very angry indeed. Whatever semantic arguments we might have about the meaning of retrospective, the truth is that the people of this country see this as an unfair retrospective tax

Angus MacNeil: rose

Mark Fisher: I will not give way. We have had a very good debate, and I am sure that other people want to get in.
	The people of this country, on whose behalf we are speaking, see this tax as retrospective and unfair, and the Government have to come back later this year and put this right.

Stewart Hosie: I wish to speak to new clauses 8 and 9. First, I should like to provide some background to new clause 8. As everyone knows, the spiralling increases in fuel prices are inflationary and they are strangling economies in remote rural areas. They are driving the haulage industry to the brink and putting the most enormous strain on family budgets.
	I would like to put this into context. When I tabled a similar amendment in 2005, I said that, according to the AA, the price of unleaded petrol had risen to 86p and that it had gone up by 6p a litre over the previous six months. By the time we debated this issue on 15 May this year, fuel was priced at between 1.10 and 1.30 a litre. Now, six weeks later, it costs an average of 1.32 a litre. In 2005, I said that Brent crude had reached $60 a barrel, up from an average of $50 in the previous year. In the run-up to the last pre-Budget report, we saw an average of $83.60 a barrel, with an increase of $68 forecast. In the run-up to the Budget, we saw an average of $94 a barrel, and in four of the five working days before the Budget, we saw record prices. When I drafted this speech last week, the price was $132 a barrel, and we have crashed through $140 a barrel since.

Tobias Ellwood: I visited Scotland recently and visited some farmers who operate combine harvesters. They used to pay 36p for diesel, but it has now gone up to 70p. It costs them about 700 to fill up their vehicles. Does the hon. Gentleman agree that we cannot wait for the pre-Budget report, and that we must act now? That is why some of these new clauses must be agreed to. We should not ignore this opportunity to seize the moment.

Stewart Hosie: I agree entirely. I think there is an immediacy about this issue. When I met the hauliers who were lobbying their MPs here today, they pointed out that some of them and others involved in the protest outside would not be in business by the time of the next pre-Budget report, so the hon. Gentleman is absolutely right about the immediacy.

Russell Brown: rose

Stewart Hosie: I will give way once more, but then I want to make some progress.

Russell Brown: I agree that a fair degree of urgency is required; the hauliers made that abundantly clear today. However, if the hon. Gentleman's new clause is the answer to the problem today in 2008 and if it was an answer to the problem in 2005, why was it not an answer to the problem in 2006 and 2007?

Stewart Hosie: We deal with the realities as we find them and we table amending provisions when we can. I think that this proposal was the answer in 2005, 2006, 2007 and 2008 and that it will be the answer in future. I will come on to explain why later, but fundamentally we need a mechanism in place to deal with spikesnow and in the future. I believe that such a mechanism is the answer, but if the hon. Gentleman is asking me why I did not table amendments in the years he mentioned, that is an entirely different question. The answer to that has more to do with time than my interest in the subject or my ability to table the provisions.
	Let me return to my opening comments. We have seen a quite catastrophic and phenomenal rise in barrel prices and prices at the pumps. Where that leaves us, according to the AA last week, is with an average diesel price that has broken through 6 a gallon. I am grateful to the European Union for its weekly oil bulletin of 26 June last week, which also sets the scene. It tells us that at 53.2 per cent., the UK has the highest total tax take on a litre of diesel anywhere in Europe.

Angus MacNeil: rose

Stewart Hosie: I will give way to my hon. Friend, but then I am really going to make some progress.

Angus MacNeil: My hon. Friend may recall that when we last visited this issue on 28 April, I pointed out that diesel fuel in my constituency was retailing at 1.34 a litre. It is now, eight weeks later, between 1.43 and 1.46 a litre, representing a tremendous amount of money coming from the pockets of the Western Isles to the Treasury at Westminsterand that from an area already paying the highest fuel tax in the UK.

Stewart Hosie: That is absolutely right. Part of the intention behind the new clauses is precisely to help fragile economies where, for a variety of reasons, the price is highest, but it is not just the economies in fragile and remote rural areas that are struggling, and neither is it only certain industry sectors like the hauliers. Rather, we are looking at primary food producers in agriculture and fish, the tourist trade in parts of the country and, because of the inflationary effects, the household incomes of every family in the countrynot just as they fill up their cars with petrol or diesel, but as they buy anything, at any time, in any shop.
	Now that I have got to the second paragraph of my speech, I am going to make some real progress. At an average of 132p a litre, diesel is now about 35p more expensive than it was only a year ago. Almost half the riseaccording the AA, about 14phas occurred between mid-April and mid-June. It is precisely the sort of spike that the fuel duty regulator is designed to smooth out. At an average of 132p a litre, only Norway's average cost of 137p a litre is higher, but given that in many areas, particularly in the north of Scotland, that price was breached a long time ago, it is safe to say that in parts of the country we almost certainly have the most expensive gallon of diesel anywhere in the world. As I said, however, it is not just remote areas that are suffering; it is industry sectors of all kinds, and I am particularly grateful to the haulage industry for its support in my attempt to have the Government see sense. I am also grateful to the National Farmers Union, the Scottish Fishermen's Federation, the Scottish Taxi Federation and many others for their support.
	The  Sunday Herald reported in April that out of the average 37,000 it costs to tank up a 44-tonne truck, the Government take 25,000 in tax. The same article confirmed that a typical 20-vehicle haulage business would have to make an extra 30,000 a year to cover the increase in fuel costsand that was in addition to the extra 30,000 that businesses had had to find to cover the increased costs last year. That was in April, however, and since then there has been a price rise of 14p per litre. That example was given when the industry expected the oil price to reach $115 a barrel by midsummer. It was $132 a barrel last week, and has exceeded $140 a barrel since.
	Here is the rub: there is no indication that the rises we have seen will stop. Arjun Murti, the Goldman Sachs oil analyst, predicts a super-spike taking the price to $200 a barrel. That may help to deal with the point raised by the hon. Member for Dumfries and Galloway (Mr. Brown). My attention was drawn today to an additional fuel-driven cost faced by hauliers in particular: the fuel levy on ferries on which they transport their trucks, which is having an impact on the west coast of the United Kingdom, in Wales, England and Scotland. It is affecting truckers travelling to Ireland, and no doubt elsewhere on the channel coast.
	It must be right to introduce now the mechanisms that we will need to smooth out future spikes, rather than driving hauliers to the wall and families into financial meltdown, and seeing rural economies strangled by the lack of action in the Bill. Let us make no mistake: a failure to act will result in the most appalling financial troubles across the country. When the haulage firm Ramage went into administration, its adminstrators cited the high cost of fuel as a contributory factor. Families are seeing their extra monthly costs rise. It is costing nearly 30 a month more to run a single diesel car, and petrol is costing more than 46 a month more for a two-car family.
	As I have said before, it is clear that remote and rural areas are struggling. In a recent debate in the Scottish Parliament, the Liberal Democrat MSP Tavish Scott spoke of the plight of one of his constituents in Brae in Shetland. Perhaps this is how the hon. Member for Taunton (Mr. Browne) should have approached his speech. Tavish Scott's constituent told him that
	despite the fact that I car share I made a decision that I could no longer justify working in Lerwick.
	People are now questioning whether it is worth going to work. Jamie McGrigor, a Conservative MSP, said:
	Many rural industries depend on a good haulage service. Forestry, agriculture, fish farming and the food and construction industrieswhich deliver basic requirementsall depend on haulage, yet hauliers in Campbeltown are laying off drivers and selling their lorries. [ Scottish Parliament Official Report, 28 May 2008; c. 9068-79.]
	All those points are backed up by the various trade representatives. Phil Flanders of the Road Haulage Association has said:
	UK hauliers are struggling as never before to cope with continually rising fuel prices... a number have ceased trading and many more are in the process of cutting back the number of vehicles they operate.
	Jim McLaren of the National Farmers Union of Scotland wrote to me saying:
	The cost of fuel, a significant constituent of which is tax in the form of VAT and duty, is jeopardising the future sustainability of Scotland's primary production and transport sectors, at the same time as exacerbating food price inflation, which is affecting every household in the country.
	The Scottish Fishermen's Federation, contrary to some reports, is backing the fuel duty regulator. It has said:
	We add our support... Transport is of course a vital component of the fishing industry and cost increases there have applied even greater pressure, felt most acutely by the more remote fishing areas of the North West and the Northern Isles.
	Given world food price inflation and concern over future supply, this is the wrong time to put further damaging pressure on the primary food producers in fishing and agriculture.
	The Federation of Small Businesses has said:
	As the largest business organisation in the country and representing over 215,000 businesses, the FSB is firmly behind the introduction of any mechanism which automatically uses extra tax revenues generated by high oil prices to reduce prices at the pumps.
	Even the Scottish Taxi Federation has written to me, not only to express its concern about the impact of rising fuel costs on the taxi trade but to
	reiterate the federation's full support for this amendment to the Finance Bill to introduce a Fuel Duty Regulator.
	Its secretary, Bill Macintosh, made the point that taxi drivers' average monthly bills have increased by about 160 over a very short period. He said that
	with fuel prices rising on a daily basis... we need help immediately.
	The Government must react positively to that demand for an immediate response, and that is what new clause 8 is designed to deliver.

Alistair Carmichael: The briefing I received from the Road Haulage Association this afternoon makes it clear that it sees the fuel duty regulator as a short-term fix at best, and that what it is looking for in the medium to long term is an essential users' rebate. That would be easy to introduce. There is the precedent of bus operators getting duty rebates. Does the hon. Gentleman agree that that would be simple, targeted and very cheap, and that if all the parties in this House were to work together we should be able to devise some mechanism for driving this forward?

Stewart Hosie: I know that the long-term objective of the haulage industry is for there to be a Europe-wide professional users' rate, and there is a lot of merit in that. There may be an opportunity to put in place an essential user rebate, and my new clause 9 hints at that with the suggestion that it might be done by using the hauliers' O operating licence. Therefore, I have a great deal of support for that in the long term, but the hauliers are also telling meand also, I am sure, other hon. Members of all partiesthat they need help now. Most importantly of all, we need to agree the principle that a Government who take 60 per cent. of the price at the pump, and who are taking a massive windfall from the North sea, must put something back when those who use the fuel need help and need it now.
	In new clause 8, proposed new subsection (1AA) would oblige the Chancellor at every Budget and pre-Budget report to provide both a forecast for oil prices and his anticipated yield from fuel duty and VAT from fuel. If we are going to use these forecasts, it is important that they are laid down in statute. Proposed new subsection (1AB) would oblige him through statutory instrument to reduce the level of duty in direct proportion to the value of the increase accounted for by VAT. I dislike in principle statutory instruments and regulation, too, but my overwhelming priority is that something must be done quickly, and this is the best mechanism by which to achieve that. Proposed new subsection (1AC) would ensure that when the price of a barrel of oil increases above the forecast, the next indexed fuel duty increase is automatically disapplied. That is important, because when the price goes up we can no longer have normal indexed duty increases withheld as a political whim; this must be an automatic consequence of a rise in fuel prices.
	I have read all the debates we have had over the past few years to determine how the Government might oppose the measure. They may well argue that VAT yield is staticthat as more VAT is taken from fuel, there is a reduction elsewhere. That argument suggests that no one eats into their savings or increases their debt, and it flies in the face of the evidence from the retail sector published by the Office for National Statistics on 20 June that sales increased in May by 3.5 per cent. The Government may also argue that yield from fuel sales is down because the price has risen, but the evidence from the Petrol Retailers Association is that there was only a very modest drop in sales earlier this year when the price rose dramatically, almost exclusively from morning domestic sales, not from commercial trade or afternoon or evening business.
	It is, I suspect, more accurate to claim that there is a long-term trend of increasing demand for total retail motor fuels. I shall refer briefly to a Department for Business, Enterprise and Regulatory Reform table on oil and oil products of December 2007. It shows that diesel sales increased in every quarter that is listed for 2007the first three quartersfrom 5.14 million tonnes to 5.32 million tonnes to 5.5 million tonnes. There is also a 7.8 per cent. increase between quarter three of 2007 and quarter three of 2006. Even taking into consideration the reduction in petrol sales as people move to diesel, there is still a net increase in diesel demand. At the start of those three quarters, diesel was 92p a litre, and it ended at 97p a litrea 5 per cent.-plus increase, or twice the annual rate of inflation, in only nine months. Those who argue that there is elasticity in fuel demand should look at the figures from the Department for Business, Enterprise and Regulatory Reform. I argue that it is fundamentally inelastic. However, notwithstanding that an elastic situation can become inelastic over time, it is clear that there is an offshore windfall. Indeed, the Chancellor confirmed in his recent letter to my right hon. Friend the Member for Banff and Buchan (Mr. Salmond) that rising fuel costs
	do generate greater receipts from North Sea Corporation Tax and PRT.

Lembit �pik: The inelasticity can be explained for rural areas because there is no other way to travel. Does the hon. Gentleman agree that it is that very dependence on diesel and petrol-powered vehicles in rural areas that makes people feel impotent in the face of these increases? Faced with a choice between driving less or reducing their expenditure on other things, they are forced to choose the latter.

Stewart Hosie: The hon. Gentleman is right and his comments mirror those of his colleague in the Scottish Parliament, Tavish Scott, who explained that people are questioning whether they can afford to go to work. Perhaps the hon. Gentleman should have a word with his Front Benchers, as his sensible approach runs counter to some of the comments that we heard earlier.

Russell Brown: Further to the point made by the hon. Member for Montgomeryshire (Lembit pik), households generally have a finite amount of money to spend. The argument may come from the Front Bench this evening that although additional income for the Treasury could be achieved through the increase in VAT, other sources of income are falling. There is great support on both sides of the House for the fuel duty regulator, but can the hon. Member for Dundee, East (Stewart Hosie) tell the House honestly that the figures add up, because that is vital?

Stewart Hosie: I agree, and I used the figures from the Department for Business, Enterprise and Regulatory Reform deliberately to show that over the first three quarters of 2007the most up-to-date information that I havethere was a net increase in motor fuel sales across the board, notwithstanding the transfer from petrol to diesel, at a time when the price went up by twice the annual rate of inflation. Whether the fuel duty reduction comes from the onshore VAT windfall or the offshore North sea windfall, we can be certain that, in terms of total tax yield, this proposal is fiscally neutral.
	The final criticism which the Government may make is that this is a one-way regulator. In the current climate, and with the very real fear of a super-spike in fuel costs, it is only right that my new clause addresses that. But there is nothing in new clause 8 to stop this Government introducing a claw-back measure to guarantee a minimum level of duty yield as per their forecast. They could do that in the pre-Budget report in the autumn at the same time as the first forecast required by the new clause.
	There is no good reason why the principle of a fuel duty regulator should not apply, and very many reasons why it should. It would help the hard-pressed families who are paying 30 or 40 a month more for fuel for their cars. It would help remote and rural communities and the fishing and farming sectors, and protect the haulage industry, which keeps this country moving. It would also act as a measure to tackle inflation. Diverse sectors across the UKnot only from Scotlandhave come together to back this measure, and I urge the House to do the same.

Nigel Griffiths: I rise to oppose new clause 3. I am afraid to say that it is all too typical of the unprincipled politicking of the modern Conservative party, which has abandoned all its pretences at trying to claim the green agenda. Indeed, it repudiates the Conservative Chairman of the Select Committee on Environmental Audit, under whose chairmanship it produced a report in February that begged the Treasury to increase taxes on motoring. It stated clearly:
	Some motoring organisations have begun calling for the next planned increase in fuel duty to be scrapped
	but said that the Treasury
	must not defer its planned rises in fuel duty.
	The report gives the rationale behind its criticism of the Government and the Treasury. On page 11, it states:
	By 200910, main fuel duty rates will...remain 11 per cent. lower in real terms than they were in 1999.
	Lower down that page, in paragraph 19, it warns that
	road traffic emissions in England went up by 12 per cent. between 1997 and 2006,
	and it links those emissions to that previous statement. And, as the report makes very clear on page 12:
	The forthcoming Budget is a test of the Treasury's environmental credibility: it must not defer its planned rises in fuel duty.
	It might have been a test of the Treasury's environmental credibility, and my colleagues passed with flying colours. As a test of the credibility of Conservative policies, it showed them to be woefully inadequate.
	In a previous report, the Committee stated:
	The Government should increase the differentials within Vehicle Excise Duty between the most and least efficient cars.
	I think that that is what the hon. Member for Putney (Justine Greening) would call eco-stealth taxes. The Conservative MPs on the Committee, who are notable for their absence today, included the hon. Members for Ruislip-Northwood (Mr. Hurd), for The Wrekin (Mark Pritchard), for Beverley and Holderness (Mr. Stuart), for Wantage (Mr. Vaizey), for Bridgwater (Mr. Liddell-Grainger) and for Bexhill and Battle (Gregory Barker) and, of course, the Chairman, the hon. Member for South Suffolk (Mr. Yeo). All those Conservative MPs signed up and, to embellish the green credentials of their party, ensured that that unanimous report argued strongly for higher fuel duties.
	The first report that I referred to made an interesting point that reflects on the debate when it asked the Treasury to consider ways to put the formulation of environmental issues outside the arena of electoral politics to some degree. Why, I wonder? Was it because the 2007 report of the quality of life policy group, co-chaired by Zac Goldsmith and the right hon. Member for Suffolk, Coastal (Mr. Gummer), stated their proposals on vehicle excise duty very clearly? Their report said that
	we propose increasing the VED differential between the top and bottom bands of emissions performance
	and that that change was
	aimed primarily at influencing the used car market.
	The synthetic concern about backdating that we hear from Conservative Front Benchers is contradicted in the document that they paraded before Friends of the Earth and other green groups, which specifically said that the party had to aim primarily at the used car market. The document also proposed a new graded purchase tax, which would put 27.5 per cent. purchase tax and VAT on some larger cars, second hand or not.
	Things have not changed so much since the Committee's report, which was produced in February. It reflected a considerable increase in fuel prices, but since February those prices have gone up even further. Are the Conservatives rowing back to take account of those prices, as some are urging? Far from it. This morning, on the BBC, the Chair of the Select Committee, the hon. Member for South Suffolk, was asked a direct question by Mr. Naughtie, who said:
	What about the back-dating which is very controversial?
	The hon. Gentleman replied:
	It is controversial; it is not of course back-dating in the traditional sense,
	but, he said,
	3 times as many people buy a second hand car as buy a new car so if we are going to use bigger differentials in Vehicle Excise Duty to influence our purchasing decisions they have to apply to existing second hand cars as well as to new ones.
	That has been the consistent policy of the Conservative Members who have a track record of championing green issues, but there are very few of them. The challenge is this: I expect to see the seven Members of the Conservative party who pressed the Treasury not to back-pedal on vehicle excise duty or fuel duty in the Lobby with us, voting against the new clause. This evening, we will see whether even some Conservatives are willing to repudiate their Front-Bench team or whether, as the hon. Member for Putney suggested earlier, they will toe the party line and betray the environment.

Peter Atkinson: Over the years that I have been in the House, I have always known that the hon. Member for Edinburgh, South (Nigel Griffiths) will leap up at the last minute to defend the indefensible if he needs to do that to defend his party. That is what he tried to do tonight. I wonder where he has been. His argument about the views of individual Conservative Members is irrelevant to the anger that the backdating of vehicle excise duty rises has caused. Does he go to Edinburgh and listen to his constituents? Does he understand the anger that has been caused?
	Ministers would be wise to accept the advice of my hon. Friend the Member for Putney (Justine Greening) and say today that they will not pursue the policy. There are certain trigger points that anger members of the public, our electorate. Sometimes they are irrelevant or extraordinary, but the backdating of the VED has caused anger. It is regressive, and many people who have decided to buy a particular car will lose thousands of pounds in the second-hand value of that car.
	The hon. Member for Bury, North (Mr. Chaytor) mentioned stamp duty, but that was the wrong example. It would have worked as an example only if somebody had purchased a house and then the Government had said, By the way, we're backdating the stamp duty. You now owe us another 150,000 for the house that you have already bought. People make decisions about what kind of car to buy on the basis of the cost at the time when they buy it. To change the ground rules is utterly wrong, which is why the vast majority of Labour Members, although not the hon. Member for Edinburgh, South, seem to agree with us on the spirit of the new clause, if not its details.

Angus MacNeil: Does the hon. Gentleman agree that the vehicle excise duty is Labour's poll tax on wheels? It is an annual charge, and it hits the poor hardest.

Peter Atkinson: Absolutely. I agree entirely. It is not only regressive, but like all regressive taxation, it particularly hurts those who can least afford it.
	My constituency is one of the most sparsely populated in England, and is on the Scottish border. Many of my constituents are not highly paid by any means, and they need their cars because there is virtually no public transport available. They have to travel many miles to find work, because work in agriculture and forestry has declined. It is common for people to drive 80 to 100 miles a day to get to and from work. Some work shifts, some are self-employed and some have to work weekends, so it would be totally impractical for them to use public transport.
	People in my constituency are already taking a huge hit on fuel bills, and we have heard from hon. Members from Scotland that the situation is the same there, with fuel priced very highly. In addition, the decisions that those people must take about what kind of car to buy has been thrown into complete confusion because of the threatened change to VED. Some models of second-hand car that cost 10,000 a few months ago would be worth little more than scrap value now. People have little hope of part-exchanging a car like that for a new one of the type that the Government want them to buy.
	People were encouraged to buy diesel cards because diesel was cheaper and gave more miles to the gallon. That was supposed to be a good thing to do, but it turns out that they would have been better advised to buy a petrol car.
	The proposal affects women in particular, and I am surprised that the Exchequer Secretary to the Treasury is so unsympathetic to our arguments. Many women in my constituency work part time: they do 16 hours a week, or a few more, but many are having to give that up. They either cannot afford the fuel, or the need to sell one of the family vehicles means that they no longer have access to a car. Those women will then be trapped at home and possibly forced to live on benefits.
	So far in the debate, there has been little discussion of another problem that people in rural areas sufferthe cost of kerosene heating oil. People in country areas do not get natural gas: we have electricity or oil, or we buy gas in cylinders. The prices of cylinder gas and kerosene have risen by more than the price of electricity and town or natural gas. The rises are huge: heating oil now costs more than 60p a litre, which means that 1,000 litres cost more than 600.
	Those rises come on top of the Government's VED decision. From the Exchequer Secretary's demeanour, I do not think that she is inclined to listen to me, but I urge her to announce that she will not go ahead with the change. If she were to do so, she would reduce the anger that many people across the country feel.

David Chaytor: We are all aware of the seriousness of the oil price crisis, which affects every individual, household and business sector in the country. I do not take that lightly, but some hon. Members do not appear to understand that the problem will not go away. We have reached a critical point in history, where global demand for oil exceeds supply. That is the background to this debate, but some hon. Members seem to want to ignore or forget that.
	The only solution to all the complex issues with which we are grapplingsuch as variable VED and the fuel duty rise planned for Octoberis to increase the efficiency with which we use oil and all the other fossil fuels. Any political party that ignores that, or which rejects moves to increase that efficiency, is deceiving itself and the electorate.
	I was delighted that my hon. Friend the Member for Edinburgh, South (Nigel Griffiths) was so critical of Opposition Front-Bench Members. Their amendment on VED has left them exposed as blatant opportunists. It has blown out of the water any shred of credibility that they might hope to gain in respect of their policies on the environment, transport and energy. I was also delighted to hear the hon. Member for Taunton (Mr. Browne) demolish the case put by the Opposition Front-Bench spokeswomanat least until he admitted that he agreed that the VED change should not apply to the existing fleet of vehicles.
	I turn now to the question of retrospectivity. The VED proposal is not a retrospective, as it will come into force for the first time next year. The changes to the bands are retrospective, but such changes have been implemented in exactly the same way since they were first introduced in 1999.
	I accept that people are worried about the resale values of vehicles in the second-hand market. However, when motorists change their vehiclesas most do every two or three yearswhat matters to them is the difference in the cost of doing so. That means that if the value of a 1994 vehicle falls, so will the value of the 1996 vehicle that a person may wish to change up to. It is the cost of changing vehicles that really matters.
	Of course, what has driven the fall in resale values already is nothing to do with the variable VED that the Government propose for next year; it is entirely to do with the quadrupling of the oil price over the past three years. That is concentrating the minds of motorists, and it is already changing their motoring habits and their choice of vehicle. So the principle that underlies the change to VED is absolutely right, and I congratulate the Government on having the courage to make such a radical change. My only criticism is that it would have been helpful both to have introduced the change before and if the Treasury had shown a little more urgency over the past 11 years in taking on board the need for such changes to environmental taxes.
	It strikes me from listening to the debate and the debate outside the House that many of those who seem to be fundamentally opposed to both the principle and the detail have not looked at the detail of the proposals. They have not looked at the way in which the current bands will be transformed into the new range of 13 bands in 2009-10. It is absurd to say that this is a massive attack on the low-income households. Some 10 million vehicles will not be affected by the change, or 10 million vehicles will pay less tax, and the drivers of those 10 million vehicles are overwhelmingly people on the lowest incomes. Vehicles registered before March 2001, which are overwhelmingly owned by low-income families, will face no change at all, because they are not affected by the enhanced variable regime. I urge my Labour colleagues, some of whom ought to know better, to look at what the Government propose before making sweeping accusations about the impact of the changes.
	The principle of variable excise duty is fair, efficient and beneficial to the environment. It concentrates our minds on our individual responsibility to respond to the challenges of climate change, on the cost of motoring and on the efficiency with which we use fossil fuels. Yes, the tax changes are about changing behaviour. They will change behaviour; they have already started to do so in a small way over the past nine years. Of course, all taxes are about changing behaviour. That is one of the key purposes the tax system.

James Paice: I am very interested to hear the hon. Gentleman refer to changing behaviour, but what will he say to the thousands of people who made their choice six or seven years ago? He is suggesting that they can somehow change their behaviour today when they made the decision seven years ago. We are simply saying that retrospective taxation should not be applied to something that relates to decisions that people have already taken and cannot change.

David Chaytor: People might look at the figures that the Government have published in the Red Book, which tell them exactly the decrease or increase in the variable bands that will come into force next year. They will see that 10 million vehicles will either get a tax cut or face no change, and they will find that, for the overwhelming majority of the 7.7 million vehicles that will experience an increase, it will be absolutely marginal in respect of both the present rate of VED and the overall cost of running a vehicle.
	I have discussed the issue with the Minister on a number of occasions and explained that I thought that she was doing absolutely the right thing, but I stressed that that some points of detail could be improved. I hope that those points of detail will be taken on board before we finalise the arrangements of next year's Budget. Of course, if anyone takes the trouble to look at the table in the Red Book, it is pretty clear that the impact of next year's VED increase is only really a matter of concern for two of the new bands: new band J and new band K. The 10 lowest bands will experience a tax reduction, no change or an increase of about 15 to 25a comparatively modest percentage increase. There are, however, issues about the vehicles that will be in VED band J and K next year, because some of them will incur a one-year increase of 90, which is almost a 30 per cent. increase.

Rob Marris: Fifty per cent.

David Chaytor: Fifty per cent. I stand corrected.
	That issue needs to be considered. Had the Treasury looked at the matter in more detail earlier, we might have phased in the increases year on year, and that would have given a stronger and more consistent signal to motorists.

Justine Greening: The hon. Gentleman seems to be almost unaware of what his Government are proposing. First, the rises that he discusses are quite stiff, although they are nothing compared with the rises that people who are currently in band F will face when they go up to bands L or M by 2010. Then, they will face rises of 245. Secondly, he is probably not aware of the transition period, because he has demonstrated what I said originallythat the period was not mentioned at all. The Government are planning that people should be in transition across two years, precisely because they know how much the measure will hurt them.

David Chaytor: I am looking at what the Government propose and reading from the chart in the Red Book. It is absolutely clear that new band J vehicles, with CO2 emissions ratings of 181 to 200 g per km, will pay 260 in 2009-10, which is a sizeable increase, but only a further 10 in 2010-11. I urge all Members who are concerned about the issue to look at the facts and at the increases.
	It is true that from next year, 7.7 million will pay a higher rate, according to the Library analysis, but of those 7.7 million, the overwhelming majority will pay only a tinya marginalhigher rate. I return to the point that the real concern is the one-year increase next year, which is not carried through to 2010-11 to the same degree, in respect of new bands J and K.
	Finally, the irony is that in respect of next year's rate, new bands L and M will show an increase of only 15 and 40, or 4 per cent. and 10 per cent., respectively. The paradox is that under the Government's proposals, the two highest-rated bands will pay less than the two bands lower down the scale, so there is an opportunity to make the system more progressive, fairer and more efficient. I hope that the Government will take those specific points on board.

John Thurso: I rise to speak to new clause 14, which stands in my name and that of several of my hon. Friends. The debate has been fascinating and wide ranging. It would be very tempting to discuss some of the topics that have been debated, but I sense that the House may prefer me to confine my remarks to the new clause, and I shall do so.
	I have a slight dilemma. As always, I have come well prepared with the detail of my arguments, but it would take a little time to expose, so I shall attempt to do the bullet-point version. I hope that if I skim across the detail, the House will forgive me but understand that the detail exists.
	The genesis of the new clause was in an amendment that an hon. Friend tabled some years ago. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) reprised it last year, and I have addressed it on a number of occasions. It is, namely, the fuel premium that is paid in remote rural areas. The premium has varied over the yearswhen I first looked, it was 6p or 7p, and it is now 13p or 14p. It is specific to remote rural areas, for which I have a definition; and although it is perhaps a small issue in the wider context of the debate about the impact of high fuel prices on the economy generally, for my constituents in rural areas it really is salt in the wound. I want to speak briefly about the principle and details of what I seek to achieve.

Roger Williams: I am sure that my hon. Friend will make this point, but the issue is not only the increase in fuel prices in rural areas, but the lack of a public transport alternative. That means that people have to have their own cars and feel the full effect of the higher prices.

John Thurso: My hon. Friend is right on both counts: about the point that he has made and the fact that I would have made it. He has saved me that job.
	The purpose of the new clause is to find a workable scheme for reducing but not eliminating the premium, to give some relief to people in remote rural areas, where, as my hon. Friend has just said, there is no alternative. In my constituency, there is a petrol station in Durness and in Tongue, which are about 50 milesor an hourapart. The average price of diesel on the north and west coasts is about 145p per litre; that is the scale of the problem.
	In my intervention on the hon. Member for Putney (Justine Greening), I alluded to the principle behind why something should be done. If one is seeking to change people's behaviour through taxation, people have to be able to make that changein this case, people still have to be able to go places. In the remote areas that I am talking about, there is no capacity to make that change and there will not be. As my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) pointed out, in many such areas the car is by far the most environmentally friendly optionfar better than buses carrying nothing but fresh air.
	The second point is that, broadly speaking, taxation should be equitable. It is clearly inequitable that in an area where there is no choice the tax should be higher, by virtue of the VAT element, than it is in other areas of the country. It is perverse that fuel costs are lower in many areas with public transport than in many areas where there is none.

Danny Alexander: I support what my hon. Friend is saying and his new clause. Does he accept that the issue is not only fairness in taxation, but the impact that the disparity has on the people whom it affects? In his constituency and mine, in the highlands, people's incomes are much lower than in the rest of the country. However, we ask those people to spend an awful lot more on their fuel and pay more tax on it, and fuel represents a greater share of their disposable income in the first place. The hardship caused is more real in such communities than almost anywhere else in the country.

John Thurso: My hon. Friend makes a good point and saves me the trouble of making it myself; I shall move on.
	Interestingly, the 30 per cent. rise in fuel costs across the country has resulted in a measurable percentage drop in car use. The theory of the impact of higher price has been tested. However, the interesting thing is that those drops are not reflected in remote rural areas because there people have no choice.
	I have discussed the principle. As for the detail, I should say that I am grateful to Treasury Ministers. Until a year ago, whenever I raised this issueas a subject for a debate or even as an amendmentI was totally stonewalled. However, the Chancellor expressed his sympathy in the Treasury Committee and, in answer to my hon. Friend the Member for Argyll and Bute (Mr. Reid), the Financial Secretary, on behalf of the Exchequer Secretary, expressed sympathy and a desire to look at the evidence. As a result, I wrote a paper, which I have circulated and sent to the Chancellor; I hope that the relevant spokesmen for all the parties have received it, because I arranged for it to be sent to them.
	The paper points out that first there needs to be a workable definition of remote rural. My scheme is based on Scotland because I was able to get all the data on Scotland that I needed. I believe that similar data are available for England and Wales, but I do not have them. Scottish national statistics include what is called the eightfold urban-rural classification, which is shown on a very helpful map with very helpful definitions. For the example set out in my paper, I have chosen band 1, which covers about 2 and a bit per cent. of the population, and between a third and one half of the Scottish land mass. Other classifications could be used, depending on how exactly one wanted to target the scheme.

Stewart Hosie: In previous, similar debates, we have had a bit of fun on the issue of definitions, not least with the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), but the eightfold model is very good because it includes a total of only 150,000 people in the most remote parts. The definition was a problem in the past, but the definition that we are considering is very good. That is why we will support new clause 14 tonight.

John Thurso: I am grateful to the hon. Gentleman for making that point, and for clearly having read the paper that I sent him. The area is definable, but one needs a simple method by which the tax rebate can be passed through the system. I have discarded the concept of designating individualsthe proposal that was put forward last yearand the concept of designating vehicles. I instead suggest that we simply designate the retail filling station. That could be done very simply, because all the retail filling stations that one would want to designate clearly fall into the area in question. I am not concerned about the fact that a passing millionaire might benefit; if they happen to be passing through that part of the world, good luck to them. I do not think that we need make any difference according to who is in the area, whether tourist, visiting businessman or resident. The scheme works well, regardless.
	If we agree that retail petrol stations should be designated, all that is required is a robust system of ensuring that the rebate is passed to the consumer, and is accounted for in a way that means that there is no fraud. My paper basically uses the VAT system of Her Majesty's Revenue and Customs, and the supply chain. I shall not go into further detail, but ask the House to take it from me that the system provides for a robust audit, and will ensure that the rebate arrives at the pump, and does not have to be paid for out of the pocket of the motorist, who is to benefit from it.
	The major criticism that the Treasury has always made of the scheme, and the criticism that the Chancellor of the Exchequer raised in the Treasury Committee recently, was on the issue of cross-border exploitation. In other words, the fear is that somebody might cross a border to get cheaper fuel. That simply does not apply, because the premium is not being got rid of; it is simply being reduced. That provides no incentive for anybody to cross a border who was not already intending to cross it. It does give those who are thinking of crossing a border an incentive to recalculate and, as a result, not cross it.
	In subsection (5)(g) of new clause 14, it is suggested that once the Treasury had agreed to the scheme, it might care to devolve it, and permit the Welsh Assembly and Scottish Parliament to operate it. There is clearly a difference of view on the importance of the scheme in different areas. I would encourage a UK-wide scheme, but if the Treasury would like to give us the ability to run the scheme in Scotland, I would certainly encourage that, too.

Gregory Campbell: I hope that the hon. Gentleman remembers that Northern Ireland is also part of the United Kingdom.

John Thurso: Indeed I most certainly do, but the advice that I had when framing this was not to include Northern Ireland, for whatever reasonI am not entirely clear.

Russell Brown: If there is any disappointment on my part, it is that I have not managed to see the hon. Gentleman's paper. Despite what other Members may think, I have some extremely remote rural areas in my constituency. There are locations in the highlands and islands where people visiting hospital in the central belt are given special payments, but people in my constituency in the extreme south-west of Scotland travel even longer distances and do not qualify for that kind of payment. That is why remote rural areas need to be tightly defined. I suspect that parts of my locality may not be included in his document, but I would be delighted if they were.

John Thurso: I am delighted to tell the hon. Gentleman that according to the colourful map that I possess, parts of his constituency are included, while small parts of mine, and indeed of his, are not. The detail was published by the Scottish Executive; they are robust figures, and I ask him to take my word for that.
	There is a strong case for righting an obvious wrong. New clause 14 would permit that to be done, and when the appropriate moment comes I would like to commend it to the House.

Rob Marris: Given the time constraints, I shall confine my remarks to new clause 3 on vehicle excise duty.
	The Government propose to make changes to vehicle excise duty as from the Finance Act 2009, a year hence. It is right that they consult on that proposal, and that is happening. My views on the way forward are fairly well known. I think that the Government need to reconsider the VED proposalsI am fairly confident that they willin the context of the overall tax system and the part that green taxes play in that matrix. That point was well made by my hon. Friend the Member for Birmingham, Northfield (Richard Burden).
	We need to consider what green taxes are. There has been a rather glib assumption that we are all talking about the same thing, and I am not sure that that is the case. Green taxes have a role to play in changing behaviour. The VED proposals that are on the table and out for consultation will have an effect on changing behaviour, but I am not sure that it is an effect that I would always wish to see. The proposals will, if implemented, lead to lower second-hand values for vehicles. That might mean, paradoxically, that an owner of such a vehicle, which might by next year be up to eight years old, may keep the vehicle instead of trading it in because they cannot afford to change it. The proposals might change behaviour as regards the earlier scrapping of vehicles that entered the fleet between March 2001 and the Finance Act changes in 2009. In the medium term a car might be scrapped when it is, say, 12 years old, because the VED changes would make it less economical to run than if they had not been introduced.
	There may also be a change in behaviour that is exemplified by my mate, Steve Smith, who runs a 1990 Ford Granada. Some hon. Members will remember thosethey are a right boat of a car. Steve is saying to me, If these vehicle excise duty changes go through, because I have got a pre-2001 car I think I might just keep it a bit longer even though I know it's causing pollution. Another effect that the proposals would have in changing behaviour is that they would devalue the currency of and support for green taxes, which would be rather undesirable.
	An aspect of green taxes that has not been mentioned is the polluter pays principle, which we already have indirectly through the emissions trading scheme. If an industrial plant pollutes a lot, it has to pay more for its carbon dioxide allowances through the European emissions trading scheme, and those prices will be ratcheted up in the future. That is a green tax, made on the polluter pays principle. Those who have been driving vehicles that pollute more, such as private motor cars or company cars, havesometimes in all innocencepolluted our atmosphere, contributed to climate change and contributed to greater Government expenditure on addressing the effects of climate change.
	For example, quite laudably, the Government have doubled spending on flood defencesboth inland and coastal sea defences. One of the reasons that such increased expenditure is needed is that the climate has changed because it has been polluted, and it has, in part, been polluted by those who have, for the past seven years or moreand I suspect almost every Member is guilty in this regardbeen driving polluting vehicles. The Government have to spend more money. We are going to have to spend more money on things such as reservoirs, and we have started to. The Government are spending more money on medical research because we are getting diseases such as malaria because of the changed climate. The Government are spending more money on biodiversity research, and on trying to prop it upit is under considerable stress and pressure because of the pollution that has led to climate change.
	It is not only a question of changing future behaviour with green taxesdesirable though that isbut a question of the polluter pays principle and the price that we have to pay as a society, often refracted through the medium of taxation, for tackling the effects of climate change. Research on plant biology and the sort of crops that we grow in this country has to be carried out. We need research on the re-engineering of our railways and roads. That is already under way and it will become a lot more necessary as the climate continues to change. Climate change causes changes in temperature, which means that such re-engineering is necessary, and it is driven, in part, by the pollution caused by people driving around in these cars.
	I am not at all convinced by the Conservative position on new clause 3. There are problems with its technicalitiesits need for a statutory instrumentto which my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) so ably adverted. I do not like the technicalities. Moreover, the suggestion that the current proposals, which I hope the Government will reconsider, are in some way a stealth tax is one of the stupidest criticisms I have ever heard, given that vehicle excise duty is one of the few taxes where people get a bit of paper through their letterbox in advance, which says, This is what the tax will be if you undertake this behaviour. It cannot be a stealth tax. I do not like the idea of stealth taxes anyway, but that really is a silly criticism of vehicle excise duty, of all things.
	Although I find the hand-wringing of the Conservatives and their new-found concern for the poor heartening on one level, I hope that the hon. Member for Putney (Justine Greening) will forgive me when I say that I am rather suspicious about it. It seems rather opportunistic in this context. An early-day motion was introduced by my hon. Friend the Member for Blyth Valley (Mr. Campbell). I understandand I stand to be corrected on the figuresthat there are 69 signatories, 12 of whom are Conservatives. That is an example of why I am somewhat suspicious of their new-found concern for the poor.

Justine Greening: We will see how many Conservative and Labour Members go through on our side compared to his.

Rob Marris: I am quite confident that the Government will have a majority because the wording of new clause 3 does not address the issue at all, and because there is plenty of time for the Chancellor to reconsider.

Anne Main: May I draw the hon. Gentleman's attention to the fact that some Membersfrom all partiesdo not sign early-day motions on principle, preferring instead to put the effort into legislation. An early-day motion, as the hon. Gentleman is well aware, is merely a statement, and some hon. Members prefer to campaign and make arguments in the House, rather than sign a piece of paper that does not have much thought behind it. I am not decrying early-day motions, but please do not say that because someone has not signed one, they do not care. That is hardly a fair statement and the hon. Gentleman knows it.

Rob Marris: Again, I would have more sympathy with that critique if there had been an average attendance of Conservative Back Benchers that even approached 12 this afternoon. The hon. Lady's argument does not hold good. I stand to be corrected, but I have not noticed any Conservative Member tabling an amendment that sets out exactly what the Conservative party believes we ought to do about vehicle excise duty. Conservative Members have neither set out their policies nor tabled an amendment, so we do not know what their policies are. It is all very well their saying that they do not like the retrospection, that we are discussing a stealth tax and that they do not like this, that and the other. I have sympathy with that position, but they do not present their policies when they have every opportunity to do that. They simply do not avail themselves of it.
	I emphasise to my hon. Friends on the Treasury Bench that I hope that the Chancellor reconsiders, but that he does so carefully and is not stampeded by some of the siren voices around us. The subject is complex and needs to be considered in the round, in the context of not only what we are pleased to call green taxes, but the overall structure of taxes in the United Kingdom, because if we lower one tax, we must raise another.

Adam Price: I shall concentrate on new clauses 8 and 9, which Scottish National party and Plaid Cymru Members tabled.
	As ever, the hon. Member for Wolverhampton, South-West (Rob Marris) made an interesting contribution. There is a danger that some Government policies that we have discussed today will give green taxes a bad name and could undermine the necessary shift towards environmental taxation, which must be supported because of the polluter pays principle that the hon. Gentleman mentioned. The hon. Member for South Thanet (Dr. Ladyman) has an interesting article in  Progress. He is a Labour Member who, as a former Transport Minister, should know about such things. He makes powerful points and supports our proposal for a fuel duty regulator.
	There are three general reasons for needing a moderating mechanism for fuel duty. First, the unprecedented volatility in the price of oil has far-reaching social and economic consequences, and we need a mechanism to dampen the peaks and troughs. Secondly, environmental taxes must be linked to clear environmental criteria; otherwise the public will believe that they are simply a revenue-raising mechanism, and that undermines the broader importance of environmental taxation. Thirdly, surges in fuel prices disproportionately hit some sectors of the economy, some sections of the community and some parts of the country disproportionately that need and deserve Government protection. I shall consider each item briefly.
	Volatility is the catalyst for the debate, as it was at the beginning of the decade, when there were also fuel protests. The oil price is historically high. It is the second oil price shock and I think that it is qualitatively different from the first because, if we have not yet reached peak oilthe moment when conventional oil production goes into irreversible declinewe are near the summit. After 1973, non-OPEC countries could expand exploration and production in response to the oil price surge. That eventually broke the power of OPEC and led to a collapse in the oil price in the mid-1980s. We are in a different position now. The growth of the emerging economies, especially that of China, has driven the oil price up in terms of demand, while the supply side is totally different from what it was. Non-OPEC conventional oil production is already in irreversible decline. The North sea may be a special caseperhaps Government policies and tax hold back production there. We will be in a position whereby OPEC has a far stronger grip on the oil market than before. From what we know of demand, OPEC will be able to hold up oil prices in the long term.
	There are some counter-arguments about the lack of investment in refining. Some refining capacity will come on stream in India, Sri Lanka and the middle east. That will have some effect. There are discussions about the long-term prospects of tar sands, oil shale and even coal oil, but most people accept that we are in a period of high oil prices and that we will remain there, certainly until alternative fuels and technologies reach maturityat least 20 years away. The fundamental driver is geological. Supplies are finite and they are running out, which is inevitable. That is the position that we are in.
	There may be a fall in the oil price if the Chinese economy goes into recession or if the US economy gets into further difficulties, and it could be a dramatic fall, but that is the point. Even against the underlying trend, which has to be upward, there may be dramatic surges and falls along the way. That is why we need a moderating regulator to provide people with the stability to plan for this new era. We have moved from an era of cheap oil and are now in an era of premium oil, and that will continue.
	We need to give people the ability to plan for a post-oil economy, as the Swedes are doing. However, we cannot do that if we are exposed to the vagaries of the international market. We need a planned transition to a post-carbon economy. A fuel regulator would be an important contribution towards enabling companies, families and individuals to do that. Large companies can do that through hedging, but we need to afford smaller companies and families some protection from massive fluctuations in the price of oil.

Alan Reid: The hon. Gentleman is talking about stability, so could he say by how much the regulator would bring the price of oil down under new clause 8, if it increased by 5p?

Adam Price: To be honest, I would have to pass on the detail of the hon. Gentleman's question, but the principle is vital.  [ Interruption. ] Well, I would ask him how big a derogation he is talking about in rural areas. I support that principle, because we take a non-partisan approach to the issue. The Liberal Democrats' new clause 14, which deals with remote rural areas, deserves support from all sides of the House. Surely he can recognise that even outside remote rural areas there is a need for a moderating influence when oil price surges cause such distortion and devastation in our economy.

Russell Brown: The hon. Gentleman and his colleagues have undoubtedly talked in the past about the fuel duty regulator that operates in France. However, if the fuel duty regulator is the panacea for the problems that he is describing, can he explain why President Sarkozy is looking to go to the EU for a reduction in the VAT rate?

Adam Price: I am not familiar with the detail of the history of the French fuel regulator. Fuel regulators exist in various OECD countriesfor example, Canada has regional fuel price regulatorsbut I will have to look into the issue. I understand that Sarkozy proposes looking into not only VAT, but a number of other mechanisms; indeed, the French have in the past supported harmonisation of EU diesel rates, which we might need to consider, given what is happening to our haulage sector. The principle of what President Sarkozy is suggesting is very much aligned with the principle behind new clause 8. We need a mechanism to smooth out the fluctuations, because they are having a devastating effect on our economy and the French economy.
	All Governments get a windfall gain as a result of fuel duties. This Government get a particularly large one, because of the high level of the duty and because we effectively have double taxation, as we levy VAT on the fuel duty element, too. The reason fuel taxes are historically popular with Governments is the inelasticity of demand, as the hon. Member for Dundee, East (Stewart Hosie) said. The estimated elasticity of demand is about 0.4 to 0.5, but is much lower in rural areas, at 0.2, for the reasons that we have heard. The result of the fact that elasticity is less than 1 is that fuel consumption falls in response to higher prices, but expenditure goes up. That is the key issue. There is a windfall gain.
	The loss of revenue argument does not hold, because people are transferring expenditure from other goods and services in the economy on to fuel. If we were able to cut fuel prices through a fuel regulator, consumption in other parts of the economy would go up and the Government would get the VAT in that way. I have not even referred to the issue raised by the hon. Member for Dundee, East about the offshore windfall.
	We have already heard about the problems of rural areas in relation to hard-pressed sectors and communities. The Government must acknowledge that it is particularly difficult for certain sectors of the economy to respond to rapid rises in fuel prices. Haulage companies, farmers and those in the fishing industry, for example, find it difficult to pass on increases in fuel costs to their customers, the end users, when oil prices are rising rapidly. That is because contracts generally last for an extended period, and there is no provision for additional fuel costs to be passed on until the contracts are renegotiated. The fact that these sectors come under pressure leads many companies within them to cut margins even further, resulting in cut-throat competition within the sectors because the companies have to go after the same contracts. This leads to a vicious circle. We are seeing haulage companies going bust in Wales and in Scotland. A fuel regulator could provide a degree of control over this situation and prevent those sectors from being exposed in this way.
	Eventually, we shall have to make the transition to a post-oil economy, and the shift towards environmental taxation is an important part of that. However, if we lose public support for the notion underlying environmental taxation, it will be difficult for a Government of any party to make the necessary changes. I therefore urge the Government to listen carefully to those on their own Benches, and to support this very modest proposal from Plaid Cymru and the Scottish National party, which is backed by many of the sectors that have been affected, in order to bring about a degree of Government protection while we are going through this difficult time as a result of the massive price rises on the world oil markets.

Robert Smith: I echo what the hon. Member for Carmarthen, East and Dinefwr (Adam Price) said about the importance of green taxes not losing their credibility because they are being abused. The Government need to look again at the VED argument, and I hope that they will use this debate as an opportunity to respond to the concerns that have been expressed across the House.
	My hon. Friend the Member for Argyll and Bute (Mr. Reid) asked the hon. Member for Carmarthen, East and Dinefwr what the effect of his regulator would be in relation to a 5p rise. My hon. Friend has worked out that the provision would result in a reduction of 1p. A far more important measure for the haulage industry would be an essential-user rebate, which would create a level playing field with the rest of Europe. The hauliers who have been lobbying Parliament are here listening to this debate. Will the Exchequer Secretary tell us how the Government view their ability to achieve a level playing field with the rest of Europe on haulage costs and, in particular, whether they would welcome the introduction of an essential-user rebate as a more targeted way of tackling the industry's concerns?
	My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) made an excellent case for new clause 14. I, too, strongly support the new clause because it attempts to address in a targeted way the problems of people in rural areas by recognising that they do not have a choice and that they have to use their cars. My hon. Friend made the excellent point that there would be no cross-border issues because the measure would create a level playing field. What would be the point of crossing the border if that were the case?
	My hon. Friend also made a good point about working off-road vehicles, and the attempts to reach a compromise regarding the concerns involved. In a rural area, it makes no sense for the farmer, ski centre or forester to own two vehicles. They need to own a 4x4 off-road vehicle primarily for business use, but rather than increasing environmental costs by owning a second vehicle, they should use the same vehicle when they need it for personal use. I very much hope that new clause 14 will gain wide support across the House. It takes forward a constructive way of tackling a matter of rural concern.
	I hope that the Exchequer Secretary will address the concerns of hauliers and clarify the Government's view on having an essential-user rebate as a means of levelling the playing field with Europe. One of the hauliers I met earlier told me that his margin used to be 6 to 7 per cent., but that it is now down to 1.7 per cent. He said that if things carry on in the same way for much longer, there will be no margin at all. In that case, he will not be in business and essential transport in Scotland will be damaged. I repeat my hope that the Government will look sympathetically on new clause 14.

Angela Eagle: We have had a fascinating debate with many interesting and thoughtful contributions, for which I commend Members.
	The Government recognise the impact that high fuel prices are having on motorists at the moment and they understand the importance of addressing it. High fuel prices are being driven by changes in the international price of crude oil, which has almost doubled over the past year. The UK continues to work with international partners to ensure efficient and effective global commodity markets.
	It was in recognition of the impact of high fuel costs on business and families, of which we have understandably heard a great deal today, that the Chancellor took the decision in the Budget to defer the planned 2p a litre increase in fuel duty. Since October and the last increase in fuel duty, fuel prices at the pump have risen by 20 per cent., even though tax rates have remained unchanged. The Chancellor will look closely at those and all the other factors when considering whether to go ahead with the planned 2p a litre fuel duty increase in October.
	Since the fuel duty escalator that we inherited from the Conservative party was abolished in 1999, fuel duty has actually fallen by 16 per cent. in real terms. The current fuel duty rate is 50.35p a litre: had fuel duty gone up in line with inflation since 1999, it would be 61p a litre; and had it gone up in line with the Conservative party's 3 per cent. escalator, as it did prior to 1999, duty rates would now be 79p a litrea full 29p a litre higher. Furthermore, figures from the Office for National Statistics show that the real cost of motoring has fallen by 13 per cent. in real terms since 1999. That is largely because the purchase price of cars has fallen while their fuel efficiency has increased.
	I now wish to deal with the new clauses on vehicle excise duty in the context of the reform of 2001, which introduced graduated levels of VED to reflect the environmental impacts of different cars as assessed by their emissions of CO2.. This was welcomed by Conservative Members at the time, although it would be difficult to discern it from their opportunistic behaviour at the moment.
	Since the 2001 reforms, carbon emissions from cars have fallen and VED is recognised as having had an impact. Total CO2 emissions from car use have fallen by 4.8 per cent. since 1997, but road transport still comprises nearly a quarter of UK carbon emissions, so we must go further in encouraging both the manufacture and purchase of low-carbon vehicles. That is why my right hon. Friend the Chancellor announced a package of measures in the Budget to support the decarbonisation of road transport, and it is in that broader context that the VED changes must be seen. However, the proposals we announced at Budget 2008 are not actually legislated for in the Bill. All we have to consider today are the Opposition new clauses and amendments, to which I now turn.
	New clause 3 is designed to provide the Treasury with the power to alter VED rates by statutory instrument at any time during the financial year, but only for cars purchased after 23 March 2006. The new clause is undesirable for a number of reasons. The Government currently have two systems of VEDone for cars purchased prior to 2001, for which comprehensive data on CO2 emissions are not available; and one for cars purchased after 2001, for which data on CO2 emissions are available.
	The new clause would create at least three systems of vehicle excise duty, and would further complicate the system by ensuring that rather than being based purely on carbon dioxide emissions, VED rates would be based on both carbon dioxide emissions and a new criterion, the tax age of the car. That would create huge confusion, and would blunt, if not completely eliminate, the overall environmental signal that the 2001 changes to VED were designed to introduce. For example, in the second-hand car market consumers would need to confirm not only the carbon dioxide emissions of a used car when making their purchase decision, but the year in which it was manufactured to determine which VED system it would then be allocated.
	The new clause would also create the potential for further fragmentation of the VED system by allowing the rate to be set at any time throughout the year. It makes it possible for the Treasury to change certain VED rates, although not all, throughout the year, and potentially on multiple occasions in each financial year. That would lead to consumer confusion and uncertainty for manufacturers, and uncertainty for customers too. It would also create serious administrative challenges for the Driver and Vehicle Licensing Agency .
	If, as new clause 3 would allow, VED rates were to be set for a financial year but could be changed at any point during that year, whenever they changed, it would be necessary for the DVLA either to provide refunds or to collect additional taxes from people who had already paid their annual car tax bills. It would also be strange to take the decision-making process for the new third VED system outside the Budget and Finance Bill cycle in which other tax decisions are made, creating uncertainty for the public finances. In particular, the system would separate the VED rate decisions from those on all other VED ratesfor example, on motorbikes, vans and heavy goods vehicles, as well as all cars purchased before 2006. Under new clause 3, the Government would still be able to choose to increase or decrease those rates, affecting existing motorists, through the normal Budget process. Whatever views there may be on the proposals for future VED changes announced in the Budgetand I have listened carefully to what my hon. Friends have saidnew clause 3 is undesirable, unworkable and downright peculiar.
	The hon. Member for Taunton (Mr. Browne) spoke very entertainingly for nearly 40 minutes, and managed to mention his amendment No. 7 on VED in the last sentence. The amendment poses problems similar to those posed by new clause 3. It calls for changes to the 2008-09 VED rates to apply only to new cars registered after 13 March 2008, a different date from that suggested in the Conservatives' new clause.
	The amendment at least refers specifically to the changes in VED rates that took effect from 13 March this year and that were debated and voted on in the Committee of the whole House. Unfortunately, it would disrupt them in a way that I cannot believe the hon. Gentleman intended. His amendment would apply the new rates only to cars purchased since this year's Budget, rather than to all cars. The DVLA would need to contact and provide refunds for all the millions of people who have renewed their tax discs since 13 March.
	Put together, new clause 3 and amendment No. 7 would create a nightmarish double whammy of administrative complexity and confusion. They would lead to a fragmented, confusing and unworkable system of VED. If both were passed, multiple systems of VED would be created for cars purchased on different dates. There would be one system for cars purchased before 2001, another for cars purchased between 2001 and 2006, and yet another for cars purchased between 2006 and 2008, for which rates could be changed at any point throughout the year. Amendment No. 7 would introduce a fourth system operating from 2008.
	The combination would completely undermine the clarity of the carbon dioxide signal that the Government successfully introduced and that was supported by both Opposition parties, as well as creating a severe and costly administrative headache for the DVLA. In addition, none of the changes would affect the VED reforms announced in the 2008 Budget, which are due to be legislated for and to take effect in next year's Finance Bill.
	These amendments serve one useful purpose, however: they highlight the inconsistencies in the arguments that have been advanced against the application of Budget 2008 changes to existing cars. Following the Committee of the whole House, the House voted on clause 15, which introduced new rates of VED for 2008-09, and these rates are currently in effect. They include an inflation-based uprating of most VED bands, and an increase of 100 on the most-polluting cars, and these changes apply to cars that were registered prior to the Budget this year. This is in line with standard Government practice: for example, when the Government introduced a new VED band for cars emitting less than 120 g/km in 2002, and a new band for cars emitting less than 100 g/km in 2003, these were applied to existing cars, giving them significant tax cuts, even though the owners had already acquired those cars.
	Of course, on every occasion that the Conservative party increased VED between 1979 and 1997, it applied it to all existing cars. If the logic of the so-called retrospection had been applied to VED rates since 1979, we would currently have a system whereby those who purchased cars in 1980 would pay 60, those who purchased them in 1981 would still pay 70, and so on ad infinitum. Thus, vehicles that emitted more carbon dioxide but that were older would have lower VED rates. Where is the environmental signal in that?
	It is entirely usual that the VED reforms announced at Budget 2008 will also apply to post-2001 cars that have already been registered. This is in no way retrospective. It is simply the way in which VED has always worked. As the debate on these new clauses and amendments has clearly shown, if it were decided to apply new VED rates only to cars registered after a certain date, it would not only be difficult to determine what that date should be, but it would be administratively complex, and, most importantly, would seriously undermine the environmental signal that is provided through the VED system, creating confusion, in particular in the second-hand car market.
	New clauses 8 and 9 relate to fuel duty. If agreed to, they would introduce a mechanism that could lead to fuel duty reductions when international oil prices exceeded their forecast prices. This mechanism would, however, be very complex, involving very expensive changes to the road fuel duty and VAT systems with no guarantee of actually reducing prices at the pumps. These new clauses rely on the idea that higher fuel prices lead to higher overall receipts for the Treasury. This is simply not the case. As fuel duty is a fixed rate, increases in fuel prices will not lead to increases in revenue. Thus while petrol prices at the pump have risen 20 per cent. since the last fuel duty increase, fuel duty itself has not gone up. As it is expected that demand for fuel will fall as a result of higher prices, the Government's revenues from fuel duty are, in fact, likely to fall as a result of the current conditions in the international oil market.

Stewart Hosie: Although it is right that the duty is constant, I am sure the hon. Lady will concede that the VAT receipts increase as the price rises. Notwithstanding whether or not there is a VAT windfallI explained, rather well I think, why I believe there isthere is most certainly an offshore windfall, as confirmed by the Chancellor in a letter to my right hon. Friend the Member for Banff and Buchan (Mr. Salmond). That could be used to offset some of the increase in the price at the pump.

Angela Eagle: There may well not be a VAT windfall, because when people spend more money on one good or service, they tend to spend less on others. They have only a certain amount of disposable income.
	On the hon. Gentleman's point about offshore oil, we do not yet have the out-turn for this year's oil receiptsthe Treasury will not receive them until Julyand he needs to remember that oil company profits can be offset against investment decisions in the North sea. We will not have proper knowledge of North sea oil receipts until the pre-Budget report.
	Overall, the wider VAT effects mean that there may be no windfall, and that is the difficulty with the proposed amendments. I understand and sympathise with the worries that are driving Scottish Members on both sides of the House to suggest mechanisms that would provide relief. I have met some of them to discuss those ideas and we will examine them. However, those Members must understand and acknowledge the difficulties with their ideas. There are no easy solutions to the pressure that families everywhere are feeling because of the huge rises in the price of oil and the knock-on effects on family budgets and business profits.
	The difficulty with the new clauses and amendments is that they seek to redistribute a tax windfall that does not exist. New clause 9 also suggests that reductions in fuel duty as a result of the proposed fuel duty regulator should be paid directly to road hauliers. I have great sympathy for road hauliers, especially the smaller companies that find it much harder to pass on their increased costs. I have spoken to many hauliers and their representatives, and I am not unsympathetic, but why should the provision apply to hauliers and not to other equally deserving essential road users? Who would be in the scheme and how would we decide? The Government recognise the road haulage industry's concerns, and those of other businesses, over the current cost of fuel, and we continue to examine the position.
	Requests for reduced duty rates for road haulage operators are often associated with the relative competitiveness of the industry compared with foreign operators. Studies have shown that European duty differentials are in many cases offset by other costs such as lower labour rates and other employer costs. Furthermore, a scheme would require the introduction of an administrative mechanism, with potentially high costs. Also any system would create significant compliance and fraud risks.
	The Government have continued to support the industry through other policy measures such as the halving of, and subsequent freezes to, HGV vehicle excise duty rates, and the reduced pollution certificate scheme. Also the Government recently announced 24 million of funding for enforcement, in particular aimed at those conducting international trips. That will mean a 50 per cent. increase in the number of HGV checks carried out, including two new enforcement sites at key points on the road network.
	I listened to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) outlining his ingenious scheme, and he helpfully sent an explanation to the Chancellor. We continue to look at the detail of his proposals, but I hope that he will acknowledge that it would cause practical difficulties that are not easily solved. However, I am not unsympathetic to his case, and I commend him on his ingenuity.
	Amendment No. 9 deals with VED for off-road vehicles and also relates to rural areas. It proposes that existing alternative fuel discounts should be extended to cover off-road working vehicles. Those used in agriculture are already exempt from VED and authorised to use red diesel. The VED exemption permits vehicles to travel on public roads for a distance of 1.5 km in order to travel between different land areas. To have any effect, therefore, this amendment would require the Treasury to make, and the DVLA to enforce, a new definition of off-road working vehicle that encompassed a broader range of vehicles. However, it is unclear how that could be achieved, and the new clause does not help with the definition. It is difficult to imagine how that could be done without providing an incentive to fraud, and therefore the need for a costly enforcement regime. However, I am happy to keep talking about those ideas.
	Finally, let me turn briefly to Government amendments Nos. 22 and 23, which make minor amendments to clause 75. The clause extends for a further five years the 100 per cent. capital allowances scheme for businesses that invest in the cleanest cars. The clause updates the carbon dioxide emissions threshold to maintain the focus on the cleanest cars and rewards people appropriately. The Government amendments are required because two small consequential changes were initially overlooked. They are needed to effect the transitional provisions and to exempt businesses that buy or lease the cleanest cars. I therefore commend the Government amendments and urge the House to reject the Opposition new clauses and amendments.

Justine Greening: We have had an interesting debate. The hon. Member for Stoke-on-Trent, Central (Mark Fisher) talked about his hope and trust that his Government would remedy this unfair retrospective road tax in the the pre-Budget report, but we have had no indication from the Minister that that will happen. I do not share his confidence and I am sure that the public will not share it when they listen to the debate tonight and read about it in the papers tomorrow. The public will find it extremely difficult to understand how Labour MPs, who were so rightly concerned about the 10p tax rate fiasco, can dither tonight when it comes to tackling the vehicle excise duty that will hit twice as many people for up to twice as much money. The tax will hit older cars and lower income families, is deeply unfair and will not have any substantial impact on CO2 emissions. We should use new clause 3 to vote against that tax right now.

Question put, That the clause be read a Second time:
	 The House divided: Ayes 240, Noes 303.

Question accordingly negatived.

New Clause 8
	  
	Fuel duties: rates and rebates: general fuel duty regulator

'(1) HODA 1979 is amended as follows.
	(2) In section 6 (excise duty on hydrocarbon oil) after subsection (1A) (as substituted by section 11 of this Act) insert
	(1AA) In every Budget Statement and pre-Budget Statement the Chancellor of the Exchequer must provide a forecast for oil prices and set out anticipated yield from fuel duty and VAT on fuel for that price and for a range of prices up to 50 per cent. above his forecast.
	(1AB) The Treasury must, following each such statement, by regulations made by statutory instrument reduce the rates of duty specified in subsection (1A) in direct proportion to the increase in the costs accounted for by VAT.
	(1AC) Whenever international oil prices rise above the level estimated by the forecast made in accordance with subsection (1AA), indexed fuel duty increases shall not take effect until the international oil prices return to the forecast level or the forecast price is amended by the next Budget or pre-Budget Statement.'. [Stewart Hosie.]
	 Brought up, and read the First time.
	 Motion made, and Question put, That the clause be read a Second time:
	 The House divided: Ayes 15, Noes 309.

Question accordingly negatived.

New Clause 14
	  
	Remote rural fuel discount scheme

'(1) The Treasury shall by regulations provide for the introduction, by no later than 1 April 2009, of a remote rural fuel discount scheme.
	(2) The purpose of the scheme is to provide a rebate on road fuel duty at qualifying retail outlets in qualifying areas to reduce the premium paid for fuel in such areas over the national average.
	(3) Qualifying retail outlets under subsection (2) are outlets located in qualifying areas meeting any criteria as defined under subsection (4).
	(4) Qualifying areas are remote rural areas as may be defined by regulations under subsection (4).
	(5) Regulations under subsection (1) may
	(a) specify the amount of the fuel duty rebate;
	(b) define remote rural areas;
	(c) define qualifying retail outlets, including any restriction;
	(d) specify how the rebate is to be applied, including
	(i) authorising HMRC to define procedures and conduct audits, and
	(ii) how any administrative costs are to be defrayed;
	(e) provide for it to be an offence for a person fraudulently to supply or sell rebated fuel other than as proscribed by these regulations;
	(f) provide for a system of registration of eligible retail outlets;
	(g) provide for the scheme to be administered in Scotland by the Scottish Executive and in Wales by the Welsh Ministers.'. [John Thurso.]
	 Brought up, and read the First time.
	 Motion made, and  Question put, That the clause be read a Second time:
	 The House divided: Ayes 67, Noes 305.

Question accordingly negatived.

Clause 75
	  
	Cars with low carbon dioxide emissions

Amendments made: No. 22, page 41, line 38, at end insert 'and
	(b) in section 50(3) of ITTOIA 2005 (cases in which expenses incurred on hiring car with low carbon dioxide emissions are not excluded from section 48 of that Act), for 2008 substitute 2013.'.
	No. 23, page 41, line 44, leave out 'applies' and insert
	'and section 50 of ITTOIA 2005 apply'. [Jane Kennedy.]

Schedule 7
	  
	Remittance basis

Mark Hoban: I beg to move amendment No. 13, page 156, line 35, leave out 'must be' and insert
	'will be deemed to be'.

Madam Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 14, page 156, line 42, at end insert
	'(5A) Where the relevant tax increase exceeds 30,000
	(a) the nomination will be valid but the charge will be capped at 30,000;
	(b) the individual will be notified that the cap has been enforced and will have the opportunity to revise the nomination of foreign income and gains;
	(c) a revised nomination is not necessary for the remittance basis claim to be valid for the tax year.'.
	Government amendments Nos. 40 to 49.
	Amendment No. 15, page 169, line 40 , leave out from beginning to end of line 13 on page 170.
	Government amendments Nos. 50 to 52.
	Amendment No. 20, page 171, line 16, after 'service', insert
	'as defined in accordance with subsection (4A)'.
	Government amendment No. 53.
	Amendment No. 21, page 171, line 21, at end insert
	'(4A) The Treasury may by order define those services which qualify as relevant services.
	(4B) The power to make an order under this section is exercisable by statutory instrument.
	(4C) A statutory instrument containing an order under subsection (4A) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.'.
	Government amendments Nos. 54 to 56.
	Amendment No. 110, page 181, line 35, after 'etc)', insert
	(a) the relevant securities or securities option shall not be treated as brought to, or received or used in, the United Kingdom if the securities are, or the securities option is, situated in the United Kingdom and cannot be situated elsewhere, and
	(b) '.
	Government amendments Nos. 57 and 58.
	Amendment No. 111, page 183, line 4, at end insert
	'(7A) This section is subject to section 41E (foreign securities income: just and reasonable apportionment).'.
	Amendment No. 112, page 184, line 27, after 'if', insert 'the relevant period or'.
	Amendment No. 113, leave out lines 30 to 32 and insert
	'(2) The relevant period or the amount of the securities income that is foreign is such period or such amount as is just and reasonable (rather than the period calculated in accordance with section 41B or the amount calculated in accordance with section 41C).'.
	Government amendments Nos. 59 to 61.
	Amendment No. 94, page 196, line 5, leave out paragraphs 80 to 91 and insert
	'80 The amendments made by Part 1 of this Schedule shall have effect from the passing of this Act.'.
	Amendment No. 10, line 37, at end insert
	'(2A) Nothing in section 832 of ITTOIA 2005 (as amended by this Schedule) applies in relation to any of an individual's relevant foreign income that
	(a) arose in tax year 2007/08 or any earlier tax year; and
	(b) has been brought to, or received, or used in, the United Kingdom by or for the benefit of any relevant person at any time before 6th April 2008.'.
	Government amendments Nos. 62 and 63.
	Amendment No. 11, page 197, line 42, at end insert
	'(5A) Where the qualifying property referred to in condition C of section 809L was gifted prior to 6th April 2008 one reads section 809L(4)(a) as follows: is brought to or received in the United Kingdom by a relevant person.'.
	Amendment No. 12, line 42, at end insert
	'(5A) Where the qualifying property referred to in condition C of section 809L was brought to the UK prior to 6th April 2008 one reads section 809L(4)(a) as follows: is brought to or received in the United Kingdom by a relevant person.'.
	Government amendments Nos. 64 to 68.
	Amendment No. 17, page 198, leave out line 38 and insert 'or'.
	Government amendment No. 18.
	Amendment No. 19, page 199, line 6, after 'money', insert
	', or directed that the money be used,'.
	Government amendments Nos. 70 to 75.
	Amendment No. 96, page 201, line 41, leave out paragraph 98.
	Government amendment No. 76.
	Amendment No. 97, page 204, line 10, leave out paragraph 105.
	Government amendments Nos. 77 and 78.
	Amendment No. 98, page 209, line 19, leave out paragraph 115.
	Government amendment No. 79.
	Amendment No. 16, page 214, line 27, at end insert
	'(11A) For the avoidance of doubt, where after 6th April 2008 a re-organisation has taken place which meets the conditions in section 127 of TCGA 1992, the new holding (or part of that holding) is a relevant asset if the condition in sub-paragraph (10)(b) or the conditions in sub-paragraphs (11)(b) and (c) would be met were the references there to the asset to be read as references to the new asset or the original asset.'.
	Amendment No. 99, page 221, line 9, leave out paragraph 148.
	Government amendments Nos. 80 and 81.
	Amendment No. 100, page 223, line 14, leave out paragraph 161.
	Government amendments Nos. 82 to 86.
	Amendment No. 101, page 226, line 1, leave out paragraph 171.
	Government amendment No. 87.
	Amendment No. 95, line 2, at end insert
	'172 The amendments made by Part 2 of this Schedule shall have effect from 6th April 2009.'.

Mark Hoban: We spent some time in the Public Bill Committeevirtually all of two sittingsdiscussing schedule 7, but interestingly, there is still enough material in it for a further debate on Report. A large number of amendments were tabled in Committee, and now on Report, because the schedule was very much a work in progress when the Bill was published. That was reflected by the fact that the order of consideration in Committee was varied so that schedule 7 and sections 22 and 23 were taken at the end of proceedings.
	I still do not think, despite the volume of amendments being tabled, that the schedule is perfect. More work will be needed to ensure that it delivers the Government's stated objectives, and one of the challenges for taxpayers is that they have to comply with the rules from 6 April this year, but legislation will only be finalised today. There is a great deal of other work to do, not just with the schedule itself, but to support implementation, and I want to come back to that theme when I address the amendments tabled by the Liberal Democrats.
	I would like to begin with amendments Nos. 13 and 14. We touched on this point in Committee, but when I revisited the record, it did not appear to be fully dealt with. My concern is that the way in which proposed new section 809C(4) is drafted suggests that the claim is invalidated if an individual nominates foreign income or gains that result in a relevant tax increase that exceeds 30,000. That is a genuine and serious concern to taxpayers, and we ask that the amendments are accepted by the Government to provide comfort. On the possible ramifications with respect to a claim for foreign tax credit, we feel that a taxpayer who makes a mistake and nominates an excessive amount of foreign income or gains, or whose return is adjusted so that too much foreign income or too many gains have been nominated, should be informed that they have over-nominated and should be entitled to adjust their nomination.
	Amendment No. 15 is a probing one, which seeks to examine the issue of mixed funds. We want to be sure that proposed new section 809Q is fit for purpose and proportional to any mischief at which it is aimed. We understand the principle that proposed new section 809R seeks to enactnamely, that where there is a transfer from an offshore account containing mixed funds to another offshore account, the funds transferred should be treated as containing the same proportion of the different categories of income and capital as the original account from which the funds were transferred. We believe that to be the case, but the drafting is complex and the legislation is not sufficiently clear.
	In that context, a far-reaching anti-avoidance rule, such as that set down in proposed new section 809Q, appears wholly inappropriate in the context of mixed-fund accounts. The provision appears to provide HMRC with excessive power to challenge transfers from mixed-fund accounts, such that taxpayers will not be confident of their ability to self-assess. As the Financial Secretary said on a number of occasions in Committee, this is a matter of self-assessment. We have expressed the concern throughout the debates on schedule 7 that, although well-advised taxpayers will understand how the rules operate, those who are not as well advised will find it difficult to understand how some of the issues can be dealt with.
	What I am looking for from the Government in respect of proposed new section 809Q is some sense that they believe that the anti-avoidance provision is necessary. It might be helpful if examples of the mischief that it is designed to counter were provided. Obviously, we do not want to encourage mischief, but we should try to strike a balance in our debate.
	It has been suggested that, if the Government are minded to retain proposed new section 809Q, thought should be given to copying the Inheritance Tax (Double Charges Relief) Regulations 1987. In that case, as well as other explanations on which the taxpayer could rely, secondary legislation was enacted, setting out examples so that primary provision could be understood. That gave taxpayers further guidance to help them comply with complex provisions. Although there was some discussion in a previous debate about whether secondary legislation was appropriatethe hon. Member for Stoke-on-Trent, Central (Mark Fisher) had some robust viewseven I concede that there are times when it would be helpful. It would be preferable to relying on non-statutory guidance, which could be put in place without proper parliamentary scrutiny.
	I shall go through the amendments in the order in which they appear on the selection list, not necessarily in the order of their importance. In Committee, there was significant debate on a matter about which there remains uncertainty among tax advisers and a wider coalition of concern than was perhaps evident when we discussed it there. Amendments Nos. 20 and 21 would create the means for the Government to tackle the treatment of fees for professional services. Professional services covers not only accountants and lawyersalthough the Financial Secretary will not be surprised to know that I have a problem with the position of accountantsbut investment management services and others.
	The Government took on board the concerns that the British Bankers Association expressed that, before amendment in Committee, the Bill put at risk extensive wealth management services in the UK. That is why the Government tabled an amendment to introduce proposed new section 809W, which grants an exemption from the remittance rules for services provided by UK-based firms with regard to property that is based wholly or mainly outside the UK. The bit about the location of the property is important because the Government have tried to look through the offshore trusts that might exist to the underlying property.
	The provision about underlying property causes two concerns. First, it might discourage investment in UK equities. Secondly, it might have an impact on UK-based fund managers. A UK fund manager's fees for managing a portfolio of non-UK shares in an offshore trust would not be treated as a remittance. Indeed, fees charged by a non-UK manager managing a portfolio of UK shares in an offshore trust would not be treated as a remittance. However, a UK manager managing a portfolio of UK shares on behalf of an offshore trust would find his fees treated as a remittance. That puts us in a position whereby we either discourage investment in UK equities if the portfolio is managed by a UK manager or end up discouraging the use of UK fund managers. It is not in the interests of the country to permit that. We have a strong fund management sector in the UK, which provides services to a wide range of individuals. We appear to have created an artificial distinction in the sort of shares or property that they manage by providing relief for non-UK property. I believe that, having responded to the initial concern and met the BBA's approval, the Government need to think more carefully about how to deal with the current problem, which is partly due to the timing of the process.
	I want to consider fees for professional services other than investment management. The Financial Secretary was helpful in Committee when I raised the matter. She said:
	The hon. Gentleman asked whether the fees exemption would apply to individuals who used a UK-based firm to advise on completing US returns and that could be within the terms of the exemption. However, it would depend on the details of each individual case. [Official Report, Finance Public Bill Committee, 19 June 2008; c. 846.]
	The explanatory notes state:
	Accountancy fees for preparing non-UK tax returns would also be covered providing the majority of the accountancy service relates to non UK property.
	That is quite a clear statement, but would UK tax advice pertaining to a non-dom's UK tax exposure with respect to overseas property also be considered to fall within the exemption? This is a variation on a theme, but would a UK adviser advising on the UK tax implications of offshore property for a non-dom be covered within the exemption? That illustrates the complexity of the issue. I would ask the Financial Secretary to consider the position of all service providers in the UK and ensure that the exemption is worded in such a way that it enables UK-based accountants and investment managers to compete fairly with foreign providers. We would therefore need to consider how the exemption could be worded.
	As I acknowledged in Committee, the mischief that the Government seek to tackle is clear. They want to avoid a situation where people set up elaborate structures to pay domestic staff. I am fully on board with the Government's approach, but it is not easy to do that, as I found out when a number of people came forward with amendments and suggestions of how I might phrase the proposal. It was difficult to word the provisions in such a way that enabled us to support the UK financial and ancillary services sector, but at the same time did not allow people to pay their driver through an offshore company. That is difficult to do within the confines of the Bill. Furthermore, I do not have parliamentary draftsmen to help me. That is why I have gone down the route, which the hon. Member for Stoke-on-Trent, Central tried earlier to persuade us not to go down, of throwing myself at the mercy of the draftsmen, the Treasury and HMRC, by suggesting that fees should be dealt with through secondary legislation. That would give us the opportunity to consult a wider range of affected businesses that provide services in the UK to non-doms, which would overcome the problem of the narrow consultation that took place during Committee.
	Our proposal would also enable a much fuller and, I hope, more watertight description, which would distinguish the mischief that we want to stop from the need to ensure a level playing field for banks, investment managers and so on. I hope that the Financial Secretary will look kindly on that, because it addresses one of the important issues that, because of its sensitivity, remains unresolved. The UK has a successful professional service sector that exports its services, but we are in danger of putting that sector at a disadvantage in relation to others.
	Let me deal with amendment No. 110, which is again about our competitiveness. The purpose of the amendment is to ensure that UK companies are not disadvantaged as compared with non-UK companies when operating employee share schemes for non-ordinarily residents and non-domiciled employees. Without amendment No. 110, UK companies will automatically have to operate pay-as-you-earn schemes and pay national insurance contributions where there are perhaps no underlying UK duties, which seems unfair if their non-UK counterparts do not have to do so. Amendment No. 110 keeps to the spirit of the changes, in that PAYE and NICs would apply only where there is a real remittance, but it does not assume that all payments in UK shares automatically constitute remittances.
	Since tabling amendment No. 110, I have received a number of representations from UK multinationals that compete in global labour markets. They believe that the Government's proposals represent a change in existing practice and a threat to their ability to recruit.
	Let me deal with the change in practice. Historically, shares were still deemed to be offshore, despite having been issued by a UK company, if they were held by an offshore trustusually in Jerseyeither in the form of certificates or in a CREST account in respect of an offshore trust. Whether they were held electronically, on a dematerialised basis, or in the form of certificates, they were deemed to be offshore. In consequence, they were treated as being remitted only when they were brought onshore, by being either physically or electronically delivered to someone working in the UK.
	The Bill as drafted will change that practice by looking at where the underlying securities were issued, rather than at where they were held. In a way, this harks back to our previous debate, in which we talked about looking through offshore trusts to see the underlying property. We have exactly the same situation here, in that the trust will be offshore but people will look through it to the underlying property. It is that ability to look through that is seen as the change of practice, and that is causing the problems.
	The consequence of that change is that it could lead to a tax charge on a non-domiciled UK resident employee, but that would not apply to UK-based employees of non-UK companies. Let me give the House an example using, for the sake of argument, Lloyd's. A non-dom employee with shares in Lloyd's that were held in an offshore trust would pay NICs and PAYE on those share options. If such a person worked for Deutsche Bank in the UK, however, they would not have to make those payments so long as their shares remained offshore.
	The Minister might tell me that there has been a misunderstanding and that both would be treated in the same way, but a number of people involved in this area are concerned that a distinction will arise between people working in the same categories but for UK and non-UK companies. Given that we are part of a global market for talent, and that many of the multinationals operate here and compete for the same people, there is a sense that UK-based companies might be at risk as a consequence of this provision.
	The easy answer might be to say that the additional PAYE and NIC costs would fall to the employee, but that would soon become a problem for the employer. Non-dom employees in that situation would pay an additional tax charge, but they might expect the employer to meet that charge. Alternatively, employers might find that people would prefer to work for Deutsche Bank instead of Lloyd's, for example. This is an important issue in regard to the competitiveness of the UK economy.
	Amendments Nos. 111 to 113 also relate to securities income. Their purpose is to ensure that the relevant income can be apportioned to UK and non-UK duties on the basis of days worked in the relevant period, and that the relevant period itself can be adjusted on a just and reasonable basis. The approach to the new legislation is to work out the relevant share scheme gain, then to apportion it between UK and non-UK duties. First, it will be necessary to identify the period to which the share scheme gain relates. This is the relevant period referred to in new section 41B, which sets down the relevant period for each of the share scheme changes on a prescriptive basis.
	Flexibility is required, however. I want to give the Minister three examples of where flexibility might be needed. First, let us assume that an employee is granted an option in company A, which is then taken over by company B at a time when he has not worked for company A long enough to exercise his option. The option is then substituted by an option in company B, which becomes exercisable in due course. At the moment, the legislation would look only to the time worked for company Bor company A; I am afraid that it is not clear to which it applieswhen clearly the period to be taken into account should be capable of including the time worked for both A and B. That would clearly give a longer period of time over which to apportion the gains.
	In the second example, we might find that an employee had acquired a particular type of shares, known as forfeitable shares, and made an election to be taxed up front. As drafted, the legislation will take into account only duties undertaken on the day of acquisition itself, whereas the proper approach should surely be to apportion over the period in which the employee could lose the shares or the period in which they have been earned. There is a risk under this type of scheme that the proper apportionment is not open.
	Thirdly, there is the example of where an employee receives an option that he can exercise immediately. Under currently proposed legislation, the relevant period would again take into account only the day of the award of the option, whereas the proper approach would be to look at the facts and work out whether it was awarded for work done or work to be done. The amendments are designed to bring about greater flexibility in working out the time period over which the gain from the shares and thus the PAYE and NIC can be apportioned.
	The key point is that the flexibility is needed on the overall apportionment. The power to apportion once a relevant period is decided is already available, which goes some of the way towards addressing the problem, but there is currently no flexibility on calculating that relevant period. The provision will prevent the oddity I have set out from arising.
	It is also worth bearing in mind the position of those who are not ordinarily resident in the UK, but still work here. Their employment income is apportioned between the time they work in the UK and the time they spend abroad. The point has been made to me that their participation in share option schemes is not treated on the same basis. Firms are increasingly moving the variable performance element of their remuneration packages away from cash to share option schemes. Treating that element as a source of remuneration in a different way from their salary could create an issue in terms of the apportionment of the charge.
	On amendment No. 10, we understand that the Government feel it necessary to amend paragraph 86 of the transitional provisions to make it clear that the exemptions for property acquired by the relevant person before 12 March 2008 apply only to goods and not money. However, as a potential unintended consequence of the amending provisions, there is now concern that any money brought into the UK prior to 6 April 2008 that was not taxed when remitted could be deemed to be taxable in 2008-09. In view of the comments of the Government and, I understand, Treasury and HMRC officials, it is felt that this is not what the Government intended, but given the importance of the issue, we feel it is vital to amend the legislation to put that intention beyond any doubt.
	The procedures on exporting and re-importing money after 6 April 2008 should be clarified. The amendments proceed on the basis that the Government do not intend individuals who have imported funds from successful source-ceasing exercises prior to 6 April 2008 to be taxed, should the funds be exported and then re-imported. The legislation prior to that date allowed the source-ceasing technique so individuals would have no reason to keep records. Given how mixed the funds could have become during their various transfers in and out of the UK, we feel that to seek to impose a tax charge in such situations would be completely impractical. I suspect that the Minister's response will be that amendment No. 62 is designed to tackle the same issue. I welcome that and on that basis I shall not press amendment No. 10. We are on the same page in trying to tackle the same issue.
	Amendment No. 11 relates to the interaction between proposed sections 809N and 809L of the 2007 Act, which could unintentionally result in a tax liability arising when an individual has gifted foreign income on chargeable gains prior to 6 April 2008. The concern is that an individual can be a gift recipient prior to that date and that the use of the terms used in and enjoyed by in proposed section 809L(4)(a) is sufficient to apply to a situation where the gift occurred prior to 6 April 2008. For example, a gift of, say, employment income to a trust from which a settlor is excluded, which uses the funds to purchase a property for the wife before 6 April 2008 would be taxed as a remittance on the husband should he continue to use or enjoy the property by residing there with his wife after 5 April 2008. We believe that the intention is not to impose a tax charge with respect to gifts that occurred before 6 April 2008, even if the use or enjoyment occurred after 5 April 2008.
	That, then, is the basis of amendment No. 11. To be helpful to the Minister, I tabled an alternative, amendment No. 12, which would apply if the Government wished the exemption to apply only when the property was brought to the United Kingdom before 6 April 2008 and any use or enjoyment occurred after 5 April 2008. In a spirit of co-operation, I have tried to give the Minister a variety of options.
	I am pleased that the Government have chosen one of my amendments. It took me a while to work out that Government amendment No. 18 was my amendment, but I am grateful to the Chancellor for appropriating it. It is one of a long line of ideas that the Chancellor has appropriated from my party since the middle of last year

Jeremy Browne: With mixed success.

Mark Hoban: Indeed. I sometimes suspect that the Government found the draft rather than the final idea, but we will leave that to one side.
	The three amendments that I tabled deal with offshore mortgages, which we debated in Committee. I appreciate that the Minister is not minded to extend the provisions to all pre-12 March 2008 offshore mortgages or to cases in which funds were used both to acquire an interest in the property and to finance enhancement work. We also know that she is not minded to remove or modify the conditions set out in paragraph 90(3). However, there is a lingering concern for the unrepresented taxpayer who may unwittingly take out a further loan and, by doing so, forfeit any entitlement to relief. I hope that the Minister will think again about the position of that unrepresented taxpayer, and consider whether it is fair that a minor variation in the loan termstaking out additional loan funds secured on the propertyshould result in the loss of all relief.
	The Minister did allow for relief when straightforward remortgaging took place before 12 March 2008, but one of the conditions is that the funds should have been received in the United Kingdom before 6 April 2008. We understand that in the case of at least two offshore mortgage providers it would be unlikely for the funds to be received in the United Kingdom. It would be more likely for the new mortgage provider to transfer the funds straight to the original provider. It is on that basis that we tabled amendment No. 8, which the Government are minded to accept. That should ensure that the legislation works in those cases, but we are still concerned about the wording of line 6 of schedule 7. We feel that it should be made clear that the individual will benefit from the provisions when he or she directs a new offshore mortgage provider to use the funds to repay the original mortgage.
	To my relief and, perhaps, that of others, amendment No. 16 is the last that I have tabled, although I will speak briefly about amendments tabled by the Liberal Democrats at the end of my speech. We are happy about that extensions have been made to re-basing as a result of the Government amendments. However, we have tabled an amendment to clarify the position when reorganisation has taken place under section 127 of the Taxation of Chargeable Gains Act 1992. Let me give an example.
	Let us suppose that X offshore settlement has held 20 per cent. share in UK trading since 1990. The shares were worth 4 million immediately before 6 April 2008. On 17 May 2008, the company was acquired by Big plc in a share-for-share exchange, such that the provisions of section 127 of the Act applied and there was no disposal for chargeable gains tax purposes. The X offshore settlement sells its shares in Big plc on 25 October 2009 for 5 million. We would welcome the clarification that the provisions of section 127 of the 1992 Act mean that the holding of Big plc is identified with the original holding in UK Trading Ltd such that the terms of paragraph 127(10)(b) or (11)(b) and (c) of schedule 7 are deemed to have been met, and relief under that paragraph would be available, should the trust make a capital payment to a foreign domicile who remits funds to the UK.
	Amendments Nos. 94 to 99 and 101 reflect the difficulty the Government have had in framing the legislation over the past few months. The problems have arisen not so much in respect of the chargealthough that has created some amendmentsbut the steps the Government have taken to tackle various anomalies in the remittance rules, which has generated a series of concerns from, for example, trade bodies, the art market and investment management companies. They were triggered by the draft legislation, which led to an initial climbdown by the Government. The complexity of the Government's proposed changes has led to the raft of amendments tabled not only today, but in Committee. A fuller and better consultation process could have dealt with some of the problems created by the Government's desire to tackle the anomalies. Although we disagree with how the Government have developed their policy in this area, it is important to get this right, and I acknowledge that the Minister sought to do so and listened to the representations.
	One of the drivers of our concerns throughout the process is that the proposed legislation will affect not only high net-worth individuals who have access to very good quality advice to help them comply, but migrant workers, Commonwealth soldiers serving in our armed forces and those working in our health care systempeople who will need to understand the choices that they have made. The Minister made it clear in Committee that people had a choice about whether to apply the remittance basis or the arising basis, but that to apply that choice they needed information, guidance and support. I know that the Financial Secretary said that that guidance was being prepared, but we are asking people to comply with legislation from 6 April that is only today to be finalised. Effectively, this is the final shape of the Bill. That is why there is continuing concern about this.
	The Institute of Chartered Accountants said in its Committee stage brief, We wish to place on record our concern that there has been insufficient time to achieve legislation that is fit for purpose and to inform taxpayers adequately of the changes that take effect from 6 April 2008. We are very concerned that in places the legislation we have currently works in a capricious or unintended manner and/or is either so complicated or so impractical that taxpayers will not be able to adequately self assess.
	I understand the thrust behind the Liberal amendments to defer the implementation of this, because I think there is a lot of work to be done. While the Government are right to say that that guidance will be available, it is not yet available and people are having to comply with the rules now. That is why interested bodies have consistently argued for a delay in commencement and that the remittance rules should be postponed to the start of the 2009-10 year. We argued about that in Committee. Some thought needs to be given to how these implementation issues will be debated and discussed in the future.
	The Institute of Chartered Accountants has suggested a body to work in conjunction with HMRC and the Treasury, with representatives of stakeholder groups, to consider the issues that will be thrown up over the course of the next year. I would be glad if the Financial Secretary accepted that as a way forward

Jane Kennedy: indicated assent.

Mark Hoban: That is the spirit in which the Financial Secretary has approached our proceedings throughout.
	The Government's approach to this legislation has not been great, and all parties will learn from it. In the interests of compliance with the tax system, we need to ensure that people know what they are meant to comply with, and future legislation should be subject to better and earlier consultation. We need to get that right as soon as possible, because I fear that come this time next year we will still be talking about amendments to the schedule.

Jeremy Browne: I had resolved not to take any interventions during my brief speech, but sadly all those hon. Members who intervened so many times in my previous speech have lost interest in the Bill and I am left to speak to a less populated Chamber. I shall not detain the House for long.
	In Committee, my hon. Friends and I raised several concerns and tabled an amendment specifically about foreign nationals in low-paid employment, small businesses employing foreign nationals, and higher education institutions. We had some useful discussion of those topics and an appropriate de minimis level for this area of the legislation. I shall not revisit that discussion today.
	The purpose of the amendments that I have tabled, as the hon. Member for Fareham (Mr. Hoban) suggested, is to allow a longer period of time for those seeking to comply and thus to make it easier for them to do so. The drafting of schedule 7 runs to 55 pages or, I am told, 22,989 words. I have not counted them myself, so I cannot vouch for that statistic. It was supplied to me by the Low Incomes Tax Reform Group. The explanatory notes alone are 160 pages long and, given how many amendments the Government have tabled to it, this area of the legislation is clearly a work in progress, even at this late stage.
	I have tabled eight amendments, but only two are substantial. Amendment No. 94 would prevent part 1 of schedule 7 from having effect until Royal Assent. The Institute of Chartered Accountants argues that taxpayers cannot be given guidance until Royal Assent, but the provisions in this part will apply before that happens. Taxpayers may therefore have acted in a way that, at the time, did not constitute a remittance, but will do so once the legislation is in force. The institute states:
	This uncertainty is likely to result in widespread confusion and non-compliance.
	That is likely to damage the UK's investment reputation.
	Amendment No. 95 would prevent changes in part 2 of schedule 7 having effect before 6 April next year. Again, the institute, to which I am indebted for its insights into this aspect of the legislation, states:
	We are concerned that there is insufficient time to scrutinise legislation of this complexity and that, despite the best efforts of all involved, complex legislation passed with such haste could contain errors.
	That is a polite way of putting it. If I had written that, I would have put will instead of could.
	Amendments Nos. 96 to 102 are consequential amendments that follow on from amendments Nos. 94 and 95.
	Let me conclude with a slightly broader point. A feature of this budgetary process and of the Finance Bill has been legislation undertaken in haste followed by long periods of revision in Committee and on the Floor of the House. I am thinking in particular about the 10p tax rate and the compensation mechanism, the changes to entrepreneurs relief in schedule 3 and the overhaul of HMRC powers. The best example of all is this schedule, which is still undergoing revisions and changes an hour after we were scheduled to have finished our debate on the legislation in totality. For that reason, amendments Nos. 94 and 95 seek to buy a bit more time and to give people who have an interest in such matters the opportunity to make the necessary adjustments.

Jane Kennedy: Since the pre-Budget report and throughout our proceedings on the Finance Bill, we have engaged actively with interested bodies. The amendments that we have tabled todaythere are 48reflect how we have listened and responded.
	I accept what the hon. Member for Fareham (Mr. Hoban) saidnamely, that the schedule might not yet be perfect. I want to make it clear that we will continue to listen. Given the technical nature of the proposals, I have asked HMRC officials to establish a joint committee in the way proposed by the Institute of Chartered Accountants in England and Wales. I pay tribute not just to the ICAEW but to a number of the representative bodies that have made suggestions and enabled me to be reassured that the final shape of the Bill is close to, if not exactly, what we sought to achieve. The joint committee will be led by HMRC. It seemed a sensible suggestion and I will be kept up to date on its work. It will be established following Royal Assent and will review the operation of the legislation in practice to ensure that it is working as intended by Parliament.
	Amendments Nos. 40 to 45, 52 and 53, like many of the amendments that we are discussing today, clarify how the rules will work in practice. I shall try to answer as many of the points as possibleall of them, if I canas I go through my speech, but not necessarily in the order in which they were made.
	Amendments Nos. 20 and 21 effectively ask the Government to draw up a list of services that will fall within the exemption and to formalise them by order and statutory instrument. I am resisting the urge to have some fun at the idea that the hon. Member for Fareham is suggesting such a route. I understand why he has suggested that change. I pay tribute to him for the thoroughness and attention to detail that he has applied to this complex area and I appreciate the way he has brought forward his arguments and pointed out the deficiencies where he has seen them. I have acknowledged some of them and, as he has recognised today, we have brought forward further amendments to respond to others.
	We cannot support amendments Nos. 20 and 21 because, with the best will in the world, we would be unable to arrive at a list of qualifying circumstances that would cover every service that we would want to include. The process would prolong any uncertainty. Our amendments Nos. 52 and 53 address the same issue from what we believe is a more pragmatic direction. They identify particular circumstances in which a remittance will always take place even if one or both of the conditions for the exemption would otherwise be met.
	The second set of Government amendments, which are amendments Nos. 46 to 49, deal with mixed funds and have also been introduced for the purpose of clarification. They provide for changes to the rules on the treatment of mixed funds to ensure that they are clear and comprehensive. We touched on that in Committee.
	Amendment No. 15 would remove the anti-avoidance provision in the way described by the hon. Member for Fareham. The provision, which we have introduced, is absolutely necessary to ensure that the rules are workable. The rules provide clarity and, crucially, they also protect the vast majority of taxpayers from those who might seek to abuse the provisions. He asked me whether I could give an example of a possible abuse without laying out suggestions as to how somebody might get around the provisions. I shall offer one.
	A non-domiciled individual could obtain a loan at the beginning of the tax year, put the loan capital into a mixed fund and then remit moneys up to the amount of the loan before repaying it. Under the ordering rules, the remittance would be capital for the year, and the anti-avoidance rule would prevent that manipulation of the mixed fund. I have no doubt that many other examples could be given, but that one might help to clarify the matter.
	I turn now to the amendments that concern the 30,000 remittance basis charge. Our amendments are minor and make a number of changes to the schedule. They make it clear that payments of the charge from overseas employment income is not a remittance. The hon. Gentleman will remember that in the Public Bill Committee I promised to return to this matter on Report to put it beyond doubt. His amendments Nos. 13 and 14 are important but, I believe, unnecessary. The self-assessment process will effectively add 30,000 to the tax bill of a remittance basis user, regardless of how much they nominate. HMRC will manually check nominated amounts, and if more has been nominated than is required, the taxpayer will be contacted and helped to correct their claim. Taxpayers will not be forced on to the arising basis.
	I was interested to hear what the hon. Gentleman said about amendment No. 110. The new rules have been broadly welcomed, because they provide a simpler and clearer basis for the taxation of employees. However, I noted the representations that he has received suggesting that they pose a risk to UK firms' ability to recruit international talent. The underlying principle that applies to individuals who have elected for the remittance basis is that income that is remitted should be taxed. Unfortunately, the amendment would undermine that principle.
	The hon. Gentleman gave an example of one employee working for Lloyds and another working for Deutsche Bank. He believes that the rules that we have established would work against the interests of Lloyds, and he gave the example of shares. It is a complicated matter, but shares are different assets. If the German bank's shares were listed on the German stock exchange, they would be German assetswhich is stating the obvious, perhaps. A UK bank's shares listed on the UK stock exchange are UK assets, and there will be no change to how we treat such assets. The new rules reflect the fact that those are different assets, which has always been the case. If representations are being made to him that that will undermine the competitiveness of UK companies, I shall want to study them and follow up on them to ensure that that is not happening.
	May I take this opportunity to clarify something that I said about employment-related securities in the Public Bill Committee? The hon. Gentleman asked me whether the phraseology of Government amendment No. 323, which was tabled in Committee, included the exercise of an option. The wording of that amendment did not include the exercise of an option, but it worked in conjunction with amendment No. 322, which did cover that. I am sorry if the answer that I gave in Committee was unclear on that point, and I hope that I have clarified the position.
	Amendments Nos. 111 to 113 are intended to apply a just and reasonable test. I hope that the hon. Gentleman accepts that I realise that in some circumstances some discretion may be needed in calculating how much income is taxable, rather than rules being applied mechanistically. We listened to representations on the matter and introduced in Committee a new clause providing for a just and reasonable apportionment to be made when the strict rules do not give a reasonable result. That provision is capable of dealing with most situations in which the relevant period rules give rise to difficulty. Furthermore, the amendments would create uncertainty and introduce complexity, to the detriment of schedule 7 as a whole.
	I turn now to the transitional rules for funds brought to the UK before 6 April. All the relevant Government amendments have been tabled in response to consultations with representative bodies. They provide clarity for remittance basis users who brought ceased-source income to the UK before April 2008.
	Amendment Nos. 11 and 13 would alter the transitional arrangements for the alienation provisions, where the qualifying property of a gift recipient was either given or brought to the UK before 6 April 2008. The amendments are not necessary, as Government amendments Nos. 62 and 63 address any risk of unintended liability that may arise.
	Government amendments Nos. 65 to 71 deal with the grandfathering rules for offshore mortgages. They extend the original grandfathering provisions for offshore mortgages to cover cases where repayments of the offshore loan were guaranteed under the terms of a bank guarantee secured on the property. The various conditions for the reliefs that apply to conventional mortgages will also apply to these arrangements, subject to the necessary changes. Government amendments Nos. 65 and 66 provide that the arrangements must have been in place before 12 March this year. Government amendments Nos. 67 and 68 ensure that relief will cease if any term of the guarantee is varied or waived, or if payments under the guarantee cease to be secured on the interest in the property, or if the guarantee is extended to cover repayment of any other debt. I know that what I have said will be studied carefully.
	Amendment No. 17 would allow relief for offshore mortgages to continue even if a further debt were secured on the interest in the property. As I made clear in Committee, the Bill provides a generous relief and I am not persuaded that there is a case for further relaxation. Amendment No. 19 would allow grandfathering for remortgages to apply where a person uses the money to repay the original loan. Again, I consider the amendment unnecessary as, according to the natural meaning of the statute, it is clear that the person involved would have used the money for the proper purpose if he had instructed the lenders to make the appropriate arrangements.
	The hon. Member for Fareham asked about unrepresented taxpayers. An offshore mortgage is a complicated financial instrument. In HMRC's experience, unrepresented taxpayers tend not to have offshore mortgages. Extending the grandfathering to a wider range of mortgages would inevitably cost millions of pounds. In addition, payments out of gains and employment income have been treated previously as a remittance, so giving relief would be to untax things that are already taxed.
	Government amendments Nos. 72, 73 and 85 clarify various elements of the rules covering offshore income gains and the transfer of assets abroad. Government amendments Nos. 74, 78, 79, 81, 86 and 87 make minor and consequential changes and are necessary for the proper working of the legislation.
	Amendment No. 16 would provide for the rebasing rules for trusts to apply to shares acquired as a result of a share reorganisation, where the original shares were held at 6 April 2008. We believe that the amendment is unnecessary. Where section 127 of the Taxation of Chargeable Gains Act 1992 applies, new shares are eligible for any reliefs to which they would have been entitled had they been acquired when the old shares were acquired. It follows that, if the original holdings were acquired before 6 April 2008, the new holding will be treated as having been acquired at the same date, and rebasing will be available on disposal of the new holding. I hope that that is clear and that I have been able to reassure the hon. Member for Fareham on a number of his amendments.
	I have saved amendments Nos. 94 to 101 until last, although in no way do I imply that they are least. The hon. Member for Taunton (Mr. Browne) has tabled them in a bid to change the commencement provisions. Amendment No. 94 would delay the reform, and amendments Nos. 95 to 100 would apply a general commencement date of next year. Delaying implementation would increase the uncertainty for the taxpayer that we have been urged to remove, especially by the City of London. It would also cost the Exchequer at least 50 million in 2009-10.
	In addition, the drafting of those amendments would mean that all transitional arrangements to protect remittance basis users during the move to the new rules would be lostfor example, successful alienations of income or gains and the grandfathering of mortgages. We cannot support any amendment that delays implementation and causes uncertainty or, as in this case, introduces retrospection into the legislation.
	Throughout our consideration of the Bill, we have had detailed and considered debates, in which hon. Members have raised important issues and presented serious arguments. We have listened carefully to their arguments and those of representative bodies. We have tabled a number of amendments to address those concerns. I accept that this may not have been the most perfect route by which to have made these changes, but I put it to the House that, by doing so, we have brought to an end the review that had been running for a long time and that was in itself a cause of uncertainty.
	I believe that this is now a good package that underpins the long-term base of the remittance basis rules. I thank hon. Members for their careful consideration of these issues and, as I have said repeatedly, the representative bodies for the time that they have given to HMRC and Treasury officials over the past few months. I commend the Government amendments and hope that, given the way we are taking these issues forward, the hon. Members for Fareham and for Taunton will feel that they need not press their amendments.

Mark Hoban: I am pleased that the Financial Secretary has welcomed the initiative taken by the Institute of Chartered Accounts in England and Wales, of which I am a member, to create a joint committee to consider how the rules work in practice and ensure that the issues that will come out of the woodwork over the next year are properly addressed.
	I am disappointed that the Financial Secretary did not give more consideration to amendments Nos. 20 and 21, which relate to fees and the important issue of competition. As the weeks and months progress, people will start to regard that as a much bigger issue. Notwithstanding the problems to which she referred, there will be a demand to define services, because the current exemptions can be seen as quite narrow. I also recognise that she has acknowledged that some situations will be kept under review, particularly in connection with the treatment of employment-related securities. I am sure that those who have made representations to me will have noted her remarks this evening and will make further representations to her, either directly or through the CBI, on this important issue.
	On amendment No. 13, the Financial Secretary's comments on how the HMRC will consider the nomination of 30,000 and the interaction with the taxpayerif that workswill provide the reassurance that people are looking for. The key phrase is if it works. It will be HMRC's responsibility to ensure that it works, but I hope that it will receive the help and support of tax advisers committed to ensuring that their clients comply with the rules. I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Amendments made: No. 40, page 162, line 15, after 'property,', insert 'service'.
	No. 41, line 17, leave out from 'property' to end of line 21 and insert ', service or consideration
	(i) derives (wholly or in part, and directly or indirectly) from the income or chargeable gains, and
	(ii) in the case of property or consideration, is property of or consideration given by a relevant person,'.
	No. 42, page 163, leave out lines 14 to 16.
	No. 43, page 166, line 16, after 'property', insert ', service'.
	No. 44, line 19, after 'property', insert ', service'.
	No. 45, line 21, after 'property', insert ', service'.
	No. 46, page 169, line 2, at end insert
	'(8) References in this section and section 809R to anything deriving from income or capital within paragraph (i) of subsection (4) do not include
	(a) income or gains within any of paragraphs (a) to (h) of that subsection, or
	(b) anything deriving from such income or gains.'.
	No. 47, leave out lines 6 to 16 and insert
	'(2) Treat property which derives wholly or in part (and directly or indirectly) from an individual's income or capital for a tax year as consisting of or containing that income or capital.
	(3) If a debt relating (wholly or in part, and directly or indirectly) to property is at any time satisfied (wholly or in part) by
	(a) an individual's income or capital for a tax year, or
	(b) anything deriving (directly or indirectly) from such income or capital,
	from that time treat the property as consisting of or containing the income or capital if and to the extent that it is just and reasonable to do so.'.
	No. 48, leave out lines 23 and 24.
	No. 49, line 34, at end insert
	'(7A) In this section 'mixed fund' means money or other property containing or deriving from
	(a) more than one of the kinds of income and capital mentioned in section 809Q(4), or
	(b) income or capital for more than one tax year.
	(7B) If section 809Q applies in relation to part of a transfer, apply that section in relation to that part before applying subsection (4) in relation to the rest of the transfer.'.
	No. 50, page 170, line 22, leave out 'sections 809L to 809R' and insert 'this Chapter'.
	No. 51, page 171, line 5, leave out 'taken to be' and insert 'regarded as'.
	No. 52, line 15, after 'met', insert
	'; but this is subject to subsection (4A)'.
	No. 53, line 21, at end insert
	'(4A) Subsection (2) does not apply if the relevant UK service relates (to any extent) to the provision in the United Kingdom of
	(a) a benefit that is treated as deriving from the income by virtue of section 735, or
	(b) a relevant benefit within the meaning of section 87B of TCGA 1992 that is treated as deriving from the chargeable gains by virtue of that section.'.
	No. 54, page 179, line 29, leave out 'sections 809L to 809R' and insert 'Chapter A1 of Part 14'.
	No. 55, page 180, line 18, leave out 'sections 809L to 809R' and insert 'Chapter A1 of Part 14'.
	No. 56, page 181, line 34, leave out from 'purposes of' to 'treat' in line 35 and insert
	'Chapter A1 of Part 14 of ITA 2007 (remittance basis),'.
	No. 57, page 182, line 1, leave out 'those sections' and insert 'that Chapter'.
	No. 58, line 11, at end insert
	'(11) See Chapter A1 of Part 14 of ITA 2007 for the meaning of remitted to the United Kingdom etc.'.
	No. 59, page 188, line 37, leave out 'sections 809L to 809R' and insert 'Chapter A1 of Part 14'.
	No. 60, page 191, line 4, leave out 'sections 809L to 809T' and insert 'Chapter A1 of Part 14'.
	No. 61, line 19, leave out from 'in' to end of line 20 and insert '
	(a) the relevant tax year, or
	(b) any subsequent tax year except one in which the individual is domiciled in the United Kingdom,
	are not allowable losses.'.
	No. 62, page 197, line 25, leave out sub-paragraphs (2) to (4) and insert
	'(2) If, before 6 April 2008, property (including money) consisting of or deriving from an individual's relevant foreign income was brought to or received or used in the United Kingdom by or for the benefit of a relevant person, treat the relevant foreign income as not remitted to the United Kingdom on or after that date (if it otherwise would be regarded as so remitted).
	(3) If, before 12 March 2008, property (other than money) consisting of or deriving from an individual's relevant foreign income was acquired by a relevant person, treat the relevant foreign income as not remitted to the United Kingdom on or after 6 April 2008 (if it otherwise would be regarded as so remitted).'.
	No. 63, line 40, leave out 'to (4)' and insert 'and (3)'.
	No. 64, line 43, leave out sub-paragraph (6).
	No. 65, page 198, line 28, after 'Kingdom', insert '(the interest)'.
	No. 66, line 29, leave out 'was secured on that interest' and insert
	', or of payments made under a guarantee of that repayment (the guarantee), was secured on the interest.'.
	No. 67, line 35, after 'made', insert
	', or any term of the guarantee,'.
	No. 68, line 36, leave out paragraphs (b) and (c) and insert
	'(b) repayment of the debt, or of payments made under the guarantee, ceases to be secured on the interest,
	(c) repayment of any other debt is secured on the interest or is guaranteed by the guarantee, or'.
	No. 18, page 199, leave out line 5.
	No. 70, line 8, leave out from 'loan' to end of line 9 and insert
	', or of payments made under a guarantee of that repayment, was secured on the interest,'.
	No. 71, line 14, at end insert
	'(6) In this paragraph guarantee includes an indemnity, and guaranteed is to be read accordingly.'.
	No. 72, line 29, after 'gain)', insert '
	(a) '.
	No. 73, line 32, at end insert ', and
	(b) after subsection (7) insert
	(8) Nothing in subsection (7) affects the application of this section in relation to an offshore income gain treated as arising by virtue of section 762(3).'.
	No. 74, page 200, line 30, leave out from 'Kingdom' to 'as' in line 31.
	No. 75, page 201, line 18, leave out from 'purposes of' to end of line 19 and insert
	'Chapter A1 of Part 14 of ITA 2007 (remittance basis)'.
	No. 76, page 203, line 37, leave out from 'purposes of' to end of line 38 and insert
	'Chapter A1 of Part 14 of ITA 2007 (remittance basis)'.
	No. 77, page 206, line 20, leave out from 'purposes of' to 'treat' in line 21 and insert
	'Chapter A1 of Part 14 of ITA 2007 (remittance basis),'.
	No. 78, page 207, line 25, leave out from 'if' to 'transfer' in line 28 and insert
	'the trustees of a settlement (the transferor settlement)'.
	No. 79, page 212, line 38, leave out paragraph 124.
	No. 80, page 223, line 1, leave out from 'purposes of' to end of line 2 and insert
	'Chapter A1 of Part 14 (remittance basis)'.
	No. 81, line 7, after 'to', insert '(or exceeding)'.
	No. 82, line 41, leave out from 'purposes of' to 'treat' in line 42 and insert
	'Chapter A1 of Part 14 (remittance basis),'.
	No. 83, page 224, line 18, leave out from 'purposes of' to 'treat' in line 19 and insert
	'Chapter A1 of Part 14 (remittance basis),'.
	No. 84, line 40, leave out from 'purposes of' to 'treat' in line 41 and insert
	'Chapter A1 of Part 14 (remittance basis),'.
	No. 85, page 225, line 9, after 'gains', insert 'or offshore income gains'.
	No. 86, line 45, at end insert
	'(4A) For those purposes treat income for a period as arising immediately before the end of the period.'.
	No. 87, page 226, line 2, at end insert
	 'General
	172 For the purposes of this Part of this Schedule, the market value of any asset is its market value for the purposes of TCGA 1992.'. [Jane Kennedy.]

Schedule 17
	  
	Insurance companies etc

Amendment proposed: No. 30, page 270, line 35, leave out from beginning to 'and' in line 36. [Kitty Ussher.]

Madam Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 31 to 33.

Mark Hoban: Will the Minister clarify the interaction between the returns that insurance special purpose vehicles are required to supply under the Financial Services and Markets Act 2000 and the tax burden? The explanatory notes almost suggest that the taxation is driven by forms. I am sure that that is not meant to be the case, but I should be grateful if the Minister commented on it.
	I am pleased to see that the Government have tabled amendment No. 33. The issue caused significant concern among all parties in Committee. By attempting to amend the Bill, the Government appeared to move to deal with a tax case that was in progress, so it is good that the Treasury has recognised the importance of the case continuing and working its way through. I know that that was welcomed by those concerned with the case.

Kitty Ussher: I thank the hon. Gentleman for those remarks. I am obviously sorry that we were not able to introduce the amendments in Committee, but we were able to engage fully with the company concerned only after Committee. That has led to the clarifying amendments before us, with which I understand the company is completely happy, so I hope that we are all square on that.
	Amendment No. 32 would introduce the power to allow tax rules to be made by Treasury order for a small and specialised class of insurers in respect of insurance special purpose vehicles. I did not pick up the precise point that the hon. Gentleman made, so if he would like to intervene now, I shall try again.

Mark Hoban: I was just concerned about the flavour of the explanatory notes regarding the interaction between the regulatory returns that life assurance companies make and the basis of taxation. The issue, which I think came up in the proceedings of the previous Finance Bill, or it may even have been during the Finance Bill before that, is the way in which reserves are classified in the Financial Services Authority's forms and so on. The explanatory notes were not entirely clear about how the FSA's returns interacted with the taxation of life assurance companies, and I just wanted confirmation that tax is not being driven by the FSA's regulatory returns.

Kitty Ussher: I can clarify that. That particular class of special purpose vehicles does not have to make returns to the FSA, which is why we need the set of rules that we will introduce through secondary legislation very soon.
	 Amendment agreed to.
	 Amendments made: No. 31, page 271, line 14, after 'period', insert
	'and distributions received by the company in the accounting period from companies resident in the United Kingdom so far as referable (in accordance with section 432A of the Taxes Act 1988) to the company's basic life assurance and general annuity business'.
	No. 32, page 272, line 8, at end insert
	 'Insurance special purpose vehicles
	19A In section 431A of ICTA (powers to amend), after subsection (2) insert
	(2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
	(2B) An order under subsection (2A) above may in particular contain provision
	(a) making amendments of any provision of the Corporation Tax Acts, or
	(b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
	(2C) An order under subsection (2A) above
	(a) may make provision having effect in relation to accounting periods current when it is made, and
	(b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.'.
	No. 33, page 275, line 31, at end insert
	'(3) But that amendment does not have effect (and is to be treated as never having had effect) in relation to a company if a relevant determination is made in proceedings commenced by the company before 15 May 2008 and is not reversed on an appeal or further appeal.
	(4) A relevant determination is a determination that losses incurred in an accounting period earlier than that in which 31 December 2002 was included are to be taken into account for the purposes of section 89 of FA 1989 in arriving at Case I profits for accounting periods
	(a) beginning on or after 1 January 2003, and
	(b) ending on or before 31 December 2006.'. [Kitty Ussher.]
	 Order for Third Reading read.

Jane Kennedy: I beg to move, That the Bill be now read the Third time.
	Will you pass on my thanks, Madam Deputy Speaker, to the Chairman of Ways and Means and to all the Chairmen who helped us in Committee? I should like to thank all Members who participated in Committee of the whole House, in Committee, and on Report over the past two days. They have closely scrutinised the major changes to our tax system that the Bill introduces. I also pay tribute to the Opposition parties' spokesmen and women, who have been extremely well briefed and meticulous in their pursuit of the detail. Although my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) is not in his place, may I say that he was missed by Finance Bill regulars? However, we were grateful for his contributions on the Floor of the House.
	The Bill supports our economy. Like the rest of the world, we are facing a tough time. The ongoing disruption to global financial markets and rising world food and fuel prices are international trends, but are having an impact in all areas of Britain. The rising price of oil is raising the cost of filling up the car and of gas and electricity bills, which have risen by more than 15 per cent. and more than 12 per cent. respectively in the past 12 months. The price of some staple foods has gone up even more steeply.
	However, our economy is well placed to respond to those challenges. Although inflation is rising, it is lower than in the USA or the eurozone and remains far lower than it was in the past; the same applies to interest rates. The UK has also benefited from more than 15 years of continuous growth and from 10 years in which income per head has risen faster than in any other country in the G7, taking us from the bottom of the table to second from the top. Crucially, there are now 3 million more people in work than there were in 1997. Employment is at a record high.
	We need to support families and businesses at this time, so the Bill delays the introduction of the fuel duty rise that was due to have taken place in April, as was discussed earlier this evening. The Bill also raises personal allowances for this year. We continue to look at the best way to continue to support those on low incomes in the future. My right hon. Friend the Chancellor has said that he will introduce proposals to do that at the pre-Budget report. We will continue to support families, but we also have to support Britain's businesses and to ensure that Britain remains a competitive place in which to do business.
	I need to mention a minor technical matter relating to the reduction in the rate of corporation tax. Owing to an unintended oversight, the rules for giving double taxation relief on foreign income did not get altered to reflect the reduction in the corporation tax rate. If that were uncorrected, some companies could face double taxation on a small part of a number of dividends received during this financial year. This technical matter obviously needs to be rectified. HMRC will discuss the solution with business representatives to find the best possible fix. We will then address the problem in next year's Finance Bill, with provisions backdated to 1 April 2008 to ensure that no income faces double taxation. In the meantime, HMRC will use its statutory discretion to give the necessary double taxation relief.
	Capital gains tax is being restructured and made significantly simpler, with an internationally competitive main rate of 18 per cent.less than half what it was 10 years ago. The entrepreneurs relief that the Bill introduces will benefit 80,000 business owners and investors this year alone. The Bill also maintains the competitiveness of the UK's tax system for non-domiciles; the system is being made more sustainable because we are ensuring that the principle of paying tax only on income remitted here is not exploited or undermined. We are responding to the challenges that our economy faces and we are supporting families and businesses.
	The Bill addresses the challenges that the British economy faces. As I said, it supports British business and families, and I commend it to the House.

Philip Hammond: May I say how disappointed we Conservatives are, not only because the Chief Secretary did not have time to join us in Committee, but because she has not, apparently, had time to make the Third Reading speech tonight? However, I congratulate the Financial Secretary and her spokeswomenI do not have to say spokesmen and spokeswomen on this occasionon how they handled the Bill through some complicated Committee sittings. They have always been well briefed and they have nearly always been good humoured. I congratulate the Financial Secretary on her performance.
	I am afraid that I cannot say the same about the Bill itself. It all started with the pre-Budget report last October, and what a lot of water has passed under the bridge since then. We have had the cancelled election, discgate, the credit crunch, the nationalisation of Northern Rock, the soaring cost of living and the stalling of economic growth. The Prime Minister's stock has hit record lows and the Chancellor's pre-Budget and Budget packages have fallen apart.
	Britain is a less self-confident place than it was last October. What people want in these difficult times is a strong Government who are clear of purpose, united around a long-term strategy, and competent in delivery. What they have is a disunited, indecisive, incompetent Government, whose failures in managing the British economy during the good years are now being paid for by the British people. The Government have become so distracted by their own problems that they have missed the opportunities that the Bill offered. They are so busy fighting each other that they have not had time to fight for Britain.
	There has never been an occasion on which a Government have had to surrender so comprehensively on their keynote financial legislation. Never in my memory has a Finance Bill grabbed the newspaper headlines in the way this one has done. First, there was the abolition of the 10p rate. We went from receiving a prime ministerial insistence that there were no losers to the announcement of a 2.7 billion compensation package for 4.2 million of them in just a few weeks. However, there is still no answer to the plight of the remaining 1.1 million people, and no confirmation of the treatment, next year and the year after, of personal allowances and additional winter fuel payments for the lucky 4.2 million. It was never clear to me why it is apparently possible to announce a solution for those 1.1 million people only in the pre-Budget report, but eminently possible to announce a solution for the other 4.2 million people in the middle of the Crewe and Nantwich by-election campaign. When short-term political interest demanded it, the Government re-opened the Budget that they said could not be re-opened, and found money that they said they did not have.
	Next there was the humiliating climbdown on capital gains tax. Faced with a united outcry from the business community, and seeing his base of business support disintegrating, the Prime Minister ordered a U-turn, picking off the largest business lobby with a watered-down retirement relief for small businesses. However, that did not work, and the retirement relief that business really wants today is the relief that the Prime Minister's retirement will bring for all of us.
	There was also the non-dom climbdownthe retreat from the proposals spelled out in the pre-Budget report. That retreat was executed with all the finesse that one would expect of a great, clunking fist, and the Government achieved the worst of all worlds. They have alienated the non-dom community and have undermined its confidence in the future and they have managed to raise 100 million less from the whole exercise than they said they would.
	I could go on and mention the foreign profits tax regime and the income-splitting rules, both of which were cancelled. The common theme is of short-term political calculation overriding long-term principle. The man whose decision not to hold a general election was not at all influenced by the opinion polls has managed the tax agenda for short-term political advantage, not long-term fiscal stability. That is the very opposite of the long-term decisions about which the Prime Minister used to boast.
	What we needed was a Finance Bill that would begin to repair the damage done to Britain's reputation and tax competitiveness over the past few months. Instead, the Government are focused on digging themselves out of their own difficulties and trying to save their skin. They never learn; instead of taking the lifelines that they have been offered on vehicle excise duty, they have insisted on enshrining son of 10p in the form of the delayed road tax rises for next April, which is probably a month or so before the county and European elections, and the following April, which will probably be a month or so before a general election. They will do another U-turn on vehicle excise duty, and they just have not had the guts to own up to it today. Labour Back Benchers have tasted blood, and fiscal policy is no longer under the control of the Chancellor. The question is not if, but when, they will force that change. Will it be at the pre-Budget report, or will they bide their time until next spring?
	The Bill goes on to extend the powers of the tax authorities to enter premises and seize material on an unprecedented scale. It raises the tax rate on small companies and road tax on 80 per cent. of cars by 2010. It penalises responsible drinkers with unfair excise duty rises, clobbers businesses with 500 million of extra capital gains tax and scraps agricultural and industrial buildings allowances. But still, after all those measures, it fails to deliver relief to the 1.1 million losers from the 10p fiascoamong the lowest earners in our society. This will go down in history as the 10p Finance Bill, and those 1.1 million losers will be a lasting reminder of this Prime Minister's abandonment of principle and conviction to political calculation. I urge my hon. Friends to record our rejection of that approach and of the Bill by voting against its Third Reading.

Jeremy Browne: Thank you, Mr. Deputy Speaker, for calling me to make a few closing remarks at the end of what has been a legislative marathon and, on many occasions, an oratorical feast, as we have just heard from the hon. Member for Runnymede and Weybridge (Mr. Hammond). According to him, not a single calculation that the Government have made has not been a cynical calculation, not a single principle that he holds is not a deeply held principle, not a single climb-down performed by the Government has not been a humiliating climb-down, and every single policy brought forward by Ministers has, at one stage or another, unravelled. An amazing array of oratorical treats has been laid before us. Most of all, we have heard on many occasions that the Government should have fixed the roof while the sun was shiningan entirely appropriate policy from the party of Thatcher, showing how much the Conservatives remain in hock to their heroine.
	The process has been a bit like being in a Big Brother household. I pay tribute to the Ministersthe Financial Secretary, the Exchequer Secretary and the Economic Secretaryand, because one gets used to the character and strengths and weaknesses of all the others performing on the Committee, to the hon. Members for Runnymede and Weybridge, for Fareham (Mr. Hoban), for Putney (Justine Greening) and for South-West Hertfordshire (Mr. Gauke). Of course, I should not forget my hon. Friend the Member for South-East Cornwall (Mr. Breed), who was good enough to allow me to return for a constituency engagement on the final day of the Committee, when I told him that it was due to wrap up by about 4 o'clock and found out the next day that it had finished at 9.15 in the evening. I am still indebted to him, but perhaps the fact that I have been in the Chamber for the past eight hours has gone some way towards paying back that debt.
	This Budget has represented an extraordinary series of difficulties and disasters for the Government, and the Finance Bill has impinged on the national consciousness and mainstream opinions in a way that I suspect most do not. My constituents, and I am sure those of all hon. Members, have taken an active interest in the 10p tax saga, vehicle excise duty retrospection, and even items that are slightly more obscure for some people, such as the confusion over non-dom taxation. What is extraordinary is that this has been a moving feast throughout the Bill's passage. The Government have been bringing in emergency announcements and new clauses, but these matters are still not resolved. It feels as though we are bringing the whole matter to a conclusionthat is the parliamentary ritual that we are performingbut the Government have still left open the issue of the 1.1 million outstanding net losers as a result of the doubling of the 10p tax rate. We also heard this afternoon that there is more ongoing unfinished business over non-doms, further deliberation about vehicle excise duty being retrospective, and the issue of the 2p on fuel duty has been postponed until the autumn. This is moving from one Finance Bill to another, one pre-Budget report to another, and one Budget statement to anothera rolling programme of confusion.
	During this period, the Prime Minister has overseen a collapse in the Government's reputation, and I am afraid that the proposals that have been put before us in this Bill are unlikely to rescue the reputation of him personally or of his Government. On that basis, Liberal Democrat Members will also be in the Lobby voting against its Third Reading.

Peter Bone: I will not detain the House for long, but it would be wrong for me not to speak, as it was the first time that I had the honour of serving on the Committee considering the Finance Bill, where I saw democracy in action. I would like to praise my Front-Bench team, who did an extraordinary job, winning the argument time and time again, but when a Division was called, those on the Government side ran in from the corridor, asked which way they were supposed to vote and every amendment was voted down.

Jane Kennedy: Except for one.

Peter Bone: Indeed, except for one.
	My abiding memory was the important debate about air passenger duty, and discrimination against tall people on aeroplanes. We were told in all honesty that this measure would raise 5 million a year, but it was then explained to the Government that not a single business airline was covered, so exactly zero would be raised by the change in the law. It was an enjoyable experience. Those on the Government Front Bench answered all the questions put to them, and they were very helpful. We won the arguments, but unfortunately we lost the votes.

Question put, That the Bill be now read the Third time:
	 The House divided: Ayes 266, Noes 184.

Question accordingly agreed to.
	 Bill read the Third time, and passed.

DELEGATED LEGISLATION

Mr. Deputy Speaker: I propose to put together the Questions on motions 3 to 8.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Capital Gains Tax

That the draft Double Taxation Relief and International Tax Enforcement (Taxes on Income and Capital) (Moldova) Order 2008, which was laid before this House on 15th May, be approved.
	That the draft Double Taxation Relief and International Tax Enforcement (Taxes on Income and Capital) (New Zealand) Order 2008, which was laid before this House on 15th May, be approved.
	That the draft Double Taxation Relief and International Tax Enforcement (Taxes on Income and Capital) (Slovenia) Order 2008, which was laid before this House on 15th May, be approved.

Energy

That the draft Climate Change and Sustainable Energy Act 2006 (Sources of Energy and Technologies) Order 2008, which was laid before this House on 15th May, be approved.

Legal Services

That the draft Probate Services (Approved Bodies) Order 2008, which was laid before this House on 9th June, be approved.

Representation of the People (Wales)

That the draft Parliamentary Constituencies and Assembly Electoral Regions (Wales) (Amendment) Order 2008, which was laid before this House on 11th June, be approved. [Liz Blackman.]
	 Question agreed to.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Immigration

That the draft Immigration (Biometric Registration) Regulations 2008, which were laid before this House on 11th June, be approved. [Liz Blackman.]

Mr. Deputy Speaker: I think the Ayes have it.

Hon. Members: No.
	 Division deferred till Wednesday 9 July, pursuant to Standing Order No. 41A (Deferred divisions).
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),
	That the draft Immigration (Biometric Registration) (Civil Penalty Code of Practice) Order 2008, which was laid before this House on 11th June, be approved. [Liz Blackman.]

Mr. Deputy Speaker: I think the Ayes have it.

Hon. Members: No.
	 Division deferred till Wednesday 9 July, pursuant to Standing Order No. 41A (Deferred divisions).

Estimates

Motion made, and Question put forthwith, pursuant to Standing Order No. 145 (Liaison Committee),
	That this House agrees with the Report [30th June] of the Liaison Committee. [Liz Blackman.]
	 Question agreed to.

Business of the House

Ordered,
	That, at the sitting on Wednesday 9th July
	(1) paragraph (2) of Standing Order No. 31 (Questions on amendments) shall apply to the Motion in the name of Mr Peter Robinson as if the day were an Opposition Day; proceedings on the Motion may continue, though opposed, for three hours and shall then lapse if not previously disposed of; and Standing Order No. 41A (Deferred divisions) shall not apply; and
	(2) notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of the Motion in the name of Secretary Hazel Blears relating to Council Tax not later than three hours after its commencement; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply [Liz Blackman.]

PETITIONS

Prison Sentences (Early Release)

Steve Webb: Three years ago, my constituent Mr. Bob Todd, a popular pub landlord in Pucklechurch, was killed outside his pub when he intervened to break up a violent incident. Mr. Todd's killer, Alexander Dix, was sentenced to six years, but Mr. Todd's widow and family have been told that he may be released in around three years, possibly because of pressure on prison places. The family are outraged by this and have collected the following petition:
	The Humble Petition of Mrs D Todd and others of like disposition,
	Sheweth
	That having lost her husband through the wilfully despicable act of one man, this man Alexander Dix should not be considered for early release. Three years for the death of another person is not long enough. The consideration that space is needed in prisons should not impact on offenders' prison sentences by means of reducing them.
	Wherefore your Petitioners pray that your Honourable House urges the Home Secretary to consider the plight of Mrs Todd and others in a similar situation and to endeavour to keep this person in prison for longer.
	And your Petitioners, as in duty bound, will ever pray, c.
	[P000226]

Planning and Development (Essex)

Bob Spink: I have received many complaints about the arrogance of Castle Point borough council and the SEEVIC college in misusing and planning to develop land and public assets, including through the demolition of publicly owned buildings. This is being done behind the backs of the public. I took up the SEEVIC principal's offer of a meeting to discuss this, but he then declined to meet me, as he also did with one of my residents. I congratulate and thank all the public-spirited people who have signed this important petition, which states:
	To the House of Commons:
	The Petition of J Everett, the residents of Castle Point and others,
	Declares that they suspect that there is a hidden agenda in respect of the public open space bounded by the Chase Thundersley on the north side, and by Runneymede Chase on the east side. They have reached this conclusion firstly because a large area adjacent to the annex of the SEEVIC College has been fenced off and they challenge the legal right for this to have been done. Second, because Castle Point councillors have decided to no longer regularly cut the grass, allowing it to become largely overgrown, and they suspect this is an attempt by councillors to deter people from using the public open space so that the land can be developed. Third, because lately it appears that students of SEEVIC College have been allowed or encouraged to take over the area during breaks, making other users of this public open space feel like interlopers and leaving the space littered with food wrappers, drinks cans, bottles and other rubbish, adding to its dereliction. They further believe that this land, like all public assets, belongs to the people, not to the council or the councillors, and that councillors should respect that fact and keep the public fully informed of their and their officers' discussions and intentions regarding land use and the future of all our public assets. They therefore urge councillors to return this land to full and proper public use and to protect it in future, for many valid planning and community interest reasons, and to ensure that this matter is dealt with by councillors rather than officers, given its importance to the wider community and the need to protect their valuable public open spaces.
	The Petitioners therefore request that the House of Commons urge the Government to press all Castle Point councillors, since they have direct responsibility for this matter, to ensure this public open space is retained for its ancient and established previous use and to immediately publish its discussions and intentions regarding land in this area and behind the Runnemede swimming pool, and to be transparent in future with the public on all planning and land use matters.
	And the Petitioners remain, etc.
	[P000227]

DUCHENNE MUSCULAR DYSTROPHY

Motion made, and Question proposed, That this House do now adjourn. [Liz Blackman.]

Nigel Evans: Some Members have commiserated with me for having an Adjournment debate at the end of a relatively late-night sitting. I was first elected to the House in the early 1990s, and I once had an Adjournment debate that started at quarter to 6 in the morning, so I know what late-night sittings are all about. This is relatively early for me.
	Duchenne muscular dystrophy is an important subject, and I am grateful to the hon. Member for Blaydon (Mr. Anderson), who is chairman of the all-party group on muscular dystrophy, for expressing a wish to contribute to this short debate. Duchenne muscular dystrophy is a severe and progressive muscle-wasting disease caused by variations in the dystrophin gene on the X chromosome, which results in the loss of the protein dystrophin in muscle cells. It primarily affects boys. The reason that I asked for this Adjournment debate is that, publicly and even inside the House of Commons, very little is known about the disease. I think that it would therefore be beneficial to give the House some short, practical information about it.
	Duchenne muscular dystrophy occurs in one in every 3,500 male births worldwide, and 100 children in the United Kingdom are born with DMD every year. Two children in the UK die every week as a result of the condition, and it is the biggest genetic killer in the UK. By the age of 11, most boys with the condition are confined to a wheelchair. Degeneration of the lungs means that boys with DMD need a ventilator to breathe. The muscles of the heart degenerate by the late teens, and the condition is severe enough to affect life expectancy. The average life expectancy among boys treated for DMD is the mid to late-20s. Likely behavioural characteristics are limited social skills, attentional deficits and depression. There is no cure at present.
	On 31 October 2007, the Prime Minister's office issued the following statement, also printed on the front page of the Action Duchenne booklet, which accompanied the lobby of Parliament just a few weeks ago:
	The Government fully accepts that everything possible needs to be done to bring an end to the tragic impact Duchenne Muscular Dystrophy has on individuals and their families.
	The work of the charity Action Duchenne has secured 2.2 million of Government funding for the MDEX project and its research. Of that amount, the Minister of State, Department of Health, the right hon. Member for Bristol, South (Dawn Primarolo), had this to say in a letter sent to an Action Duchenne parent on 7 January 2008:
	The 2.2 million granted to the project represents a significant and appropriate investment in view of the fact that the research is still at a relatively early stage and there are competing demands for resources. We are therefore not in a position to commit further funding to this project at this time.
	At this moment in time, there are only two research centres of excellence in the UKone in London, the other in Newcastle.
	I have long been aware of DMD as a condition, but I was not aware by any stretch of the imagination of the impact it has on families or of the severity of the disease. At a recent lobby of Parliament by Action Duchenne, I met my constituent, Bernard Mooney, whose son Ben is seven years old and has DMD. Ben's prognosis is that he will be in a wheelchair by the end of primary school, becoming completely paralysed by his late teens, leading to a shortened life expectancy of around 20 years. Ben has been named as a suitable candidate for a trial of a new therapy at Newcastle's specialist DMD centre, which it is hoped will slow the wastage in his legs.
	The chief executive officer of Action Duchenne, Nick Catlin, has also contacted my office, as did a number of other people when they knew that my Adjournment debate was happening. Doron Rosenfeld has a son called Gavriel who is six years old and was diagnosed two years ago with DMD; his family were told that he would live to his early 20s and that there was no cure. It is a harsh reality for any parent to facethat your child will degenerate in front of your very eyesbut the situation is not as definite as the Rosenfelds were told. Research is close to making a major breakthrough. As a consequence, Doron and Kerry, his wife, have set up the GM Trust.
	I hope that everyone listening to the debate or who reads it in  Hansard will take some time to visit the website www.thegmtrust.org, where they will find an amazing film. If they contact the site administrator for a password, they will gladly be supplied with it. I would like to take this opportunity to thank Lord Attenborough for his contribution to the video. The significant weight that he has put behind this project will ensure that those who are unaware of the particular condition will get a better understanding of what it is all about.
	In part of that film a man called Mark Styler is interviewed about his life with DMD. He talks movingly about living a life of reasonable quality, while being barely able to breathe and almost completely paralysed through muscle degeneration. Every breath is a struggle, aided by a respirator, but his positivity and attitude were amazing to behold. I was humbled by watching the video. He said that he decided that it was not the quantity but the quality of life that mattered. Sadly, he died recently at the age of 34, but he was able to live that relatively long life because of the advancement in his treatment.
	DMD is an incredibly severe disease. The impact on the child is sadly there before our eyes and the impact on the parents is just as real and terribly painful. Doron Rosenfeld told me that it was all consuming. We have a moral obligation to do whatever we can to advance the treatments for DMD. We cannot let the issue be brushed under the carpeta phrase that my office has heard from a number of the people who contacted us.
	DMD is, as I have said, the biggest genetic killer in the UK and 2.2 million is simply not enough to ensure that we are doing our utmost. The GM Trust alone has raised more than 1 million in the last year. Doron and Kerry Rosenfeld are an inspiration, but they would be the first to say that they have received tremendous support from the local community. Anyone who sees their son and knows of the story of DMD is only too happy to support the cause. One lady who contacted me about her grandson who has DMD has helped to raise 23,000 over the last few years just through local charity nights. I congratulate her and everyone else who has got involved in these campaigns.
	Those who have loved ones suffering from DMD feel that the Government are simply not doing enough. I realise that there are competing demands for funds in all fields of medicine, but we are talking about children who, in many cases, are failing to live past the age of 20. It is unacceptable that, in 2008, we should turn around and tell them and their parents that there is no cure. We should be funding research in current projects and clinical trials. The 100 boys who will born with the disease in the United Kingdom in 2009 should not be told that nothing can be done. Words of sympathy from Ministers will simply not be sufficient. There needs to be a commitment to further funding, to increased funding, and to ensuring that the funding is ring-fenced for DMD.
	There is alwaysrightlyan outcry when children are killed on the roads. However, a huge amount of money is available for road safety, and children are taught at an early age about the dangers of crossing the road. In 2007, 121 children were killed on the roads. We would not think of telling their parents that there was nothing we could do about road safety. It is also entirely unacceptable that there are only two centres of excellence devoted to DMD.
	Ben Mooney lives in Clayton-le-Dale in my constituency. Every six months, his parents are faced with either a three-and-a-half-hour journey to Newcastle or a four-and-a-half-hour drive to London for his check-up. They are not alone, but the reason they need to undertake that journey is the lack of a translational network across the United Kingdom. I do not know how we can justify asking parents and children to travel those distances, particularly given the children's condition. Perhaps it is easier when the children are aged six or seven, with no noticeable signs of DMD, but when they become wheelchair-bound, transport for a family becomes even more difficult.
	As the disease progresses, Ben will need constant care on the journey, which means that both parents must take time off work. I am amazed that families such as the Mooneys have no other option. I should like the Government to commit themselves to a workable, translational network of care. A centre in the new hospital that I believe is being built in Manchester would be a good start. The Department of Health must ensure, especially in the current climate, that local GPs know about DMD, and that information is available to them so that they are in the best possible position to offer advice to families. I fear that too many GPs are made aware of advances by parents after those parents visit Newcastle or London. That should not be the case.
	This highlights the problem that there is no central push to tackle DMD and bring hope to families affected by it. We should not allow people to think that it is everyone for himself; the Government need to take a strong lead by making a commitment to helping those families. As Professor Muntoni, a professor of paediatric neurology, notes in a film on the GM Trust website, things have changed dramatically in the last few years. Scientists are close to a breakthrough, and we genuinely can make that breakthrough happen more quickly. However, only the Government can provide the catalyst for advancement. I know that simply throwing money at the problem is not the solution, but a proper and structured investment programme, coupled with a translational network across the UK, will make an enormous difference.
	I should be grateful if, having heard what I have said, the Minister would agree to meet me, along with a small delegation, to discuss DMD, so that those people's concerns and hopes can be aired and we can make progress. It would be a small step, but a welcome one, although it would be just for the short term. In the longer term, I should like the Government to take some points away from the debate.
	First, funding for DMD research and clinical trials must be increased and ring-fenced. Secondly, families must have better access to treatments and specialists, which means expanding the models of Newcastle and London to create a better translational network across the UK. Thirdly, the profile of DMD must be raised both publicly and in the NHS. Parents should not be forced to seek information; it should be readily available.
	This is, of course, not a party political topic, or one on which to score points. I did not realise the severity of DMD until Bernard, Ben's father, came to see me. I applied for the debate because I felt that we ought to know about DMD. The House has now heard about its effects, what children who suffer from DMD and their loved ones are going through, and what could be done about it. These proposals need serious consideration. We have a moral obligation. I believe that not enough is being done now, and it would be shameful if we did not reassess the steps that we have taken so far and ensure that we do more. Parliament is realising what a serious issue this is. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) approached me only yesterday and spoke very movingly of a constituent whom he has met and who suffers from DMD.
	Ben Mooney and Gavriel Rosenfeld are adored by their parents, who would do anything for them. They are not alone. It is high time that we did more to help them.

David Anderson: I congratulate the hon. Member for Ribble Valley (Mr. Evans) on raising this subject. The debate is very timely. I had been in the House for only a month when I attended a lobby in 2005 at the invitation of some children at a local school whose teacher had a son who was suffering from DMD. I knew nothing about it, although I come from a family that has been devastated by myotonic muscular dystrophy.
	However, the hon. Gentleman highlighted the big difference between myotonic and Duchenne: we are talking about young boys dying before they are out of their teens. I have a great deal of sympathy for the Minister because we have a debate almost every day of the week about specific diseases, but here we are talking about young boys dying, so this is a special case.
	I do not wish to say anything further about the research and the drugs that are being developed as a result of the work being done by people such as Professor Muntoni, as that has been well rehearsed by the hon. Gentleman, except to say that more money is needed.
	Let me explain what motivated me to attend and speak in this debate. For the last four years, we have met Ministers in both this House and the other place, and what we have stressed to them is that although it is clear that we need more research and more drugs, we are not sharing good practice on how to care for these boys. We are not sharing good practice on physiotherapy, on how to help them to breathe properly, or on how they can get access to wheelchairs, which can make a massive difference to their lives. A recent report by the Muscular Dystrophy Campaign highlights that. I ask the Minister to meet meand perhaps the hon. Gentlemanand the representatives of the campaign to go through the report, because it is very clear that commitments that we have been given over the past three years that good practice on care would be shared have not been met, so things are not going as they should be.
	The NHS national specialist commissioning group should now recognise neuromuscular services as being specialist. If it does not, the sharing of good practice will not be focused. I know there is a big ongoing debate in this House about how to focus on and target such things. Part of the reason for setting up the specialist commissioning group is to make targeting work. If muscular dystrophy is kept outside that, it will fall further behind.
	I want to close by returning to the report that the hon. Gentleman mentioned. It says the system has failed; however, it is not the system but Members in this House who have failed. If we go back to a lobby next June to meet the boys we met a fortnight ago and more of them are no longer there because they have died, we will have failed them again. We must put this right.

Dawn Primarolo: I congratulate the hon. Member for Ribble Valley (Mr. Evans) on securing this important debate, and I also congratulate my hon. Friend the Member for Blaydon (Mr. Anderson). I know that public discussion is particularly important to parents coping with the realities of DMD, in order to raise awareness of the issues they and their children face, and I am grateful to the hon. Gentleman for having addressed them so eloquently in the House tonight and for providing the background and explaining the issues that need to be understood.
	The case has been made that enhanced medical and clinical research, better support services and care closer to home can make a major difference to the quality of life of people with DMD, and, indeed, can help to extend their lives, and the Department is aware that neuromuscular services do not always adequately meet the demands of the 1,500 people living with DMD, their families and carers. Three hard-hitting reports published by the Muscular Dystrophy Campaign on the provision of neuromuscular services for all the dystrophies highlighted significant variations that exist across localities. The Action Duchenne Report Bringing Duchenne Research into the Clinic highlights the significance and potential of the research that is under way.
	The United Kingdom is a world leader in health research. These advances could not have happened without the skills and commitment of scientists and clinicians and, of course, the unstinting support of the voluntary sector. I know that Action Duchenne is lobbying for ring-fenced funding for Duchenne research, and the hon. Gentleman referred to a letter I wrote. The Government position is that neither the National Institute for Health Research nor the Medical Research Council can ring-fence funding for specific conditions or diseases. The reason is that each piece of research and each application should be assessed. Both organisations welcome applications for support for research into various aspects of human health. These are subject to peer review and judged in open competition, with funding awarded on the basis of the scientific quality of the proposals made.
	The important point is that the Government are doing more than ever to try to support health research. The implementation of the research strategy Best Research for Best Health has resulted in an expansion of our research programmes and in significant new funding opportunities. That has been boosted by the Department's 2007 comprehensive spending review settlement, which gave substantial extra sums to the MRC and NIHR. By 2010-11, total Government investment in health research will top 1.7 billion.
	So the funding is there. It must be right that the NIHR and MRC awards are made through an open, competitive and peer-reviewed process, so that we get the best research. We do not say that only certain types of projects should apply, and in that way we support the best science, get the best possible results, and reinforce our international standing.
	As the hon. Gentleman and my hon. Friend said in their eloquent contributions this evening, we still fight against some dreadful diseases that lack treatment and cure and exert a dreadful cost on the individuals concerned and their families. All of us want the new discoveries and developments that hold out the hope of new treatments to benefit patients at the earliest possible point. That is why the Government place an emphasis on experimental and translational medicinethe very areas on which the hon. Gentleman touched.
	Research means better patient care and a better future. It is this Government's aim to enable every patient in the NHS to have the right to take part in medical research that is appropriate for them, if they choose to do so. That is especially important given the points that the hon. Gentleman made about the funding of the trial that is under way now. He may be aware that my right hon. Friend the Secretary of State announced plans at last week's health research summit that will ensure that patients are made aware about ongoing research, and about opportunities for them to join clinical trials.
	I know that a particular issue of concern to people with DMD and their families is timely access to new drugs and treatments. It is absolutely understandable that patients and their families want potential treatments to become available as soon as possible, but we need to ensure that the quality, safety and efficacy of any potential treatments is not in doubt. The process can sometimes seem frustratingly slow to those individuals and their families, but it is essential that the appropriate trial protocols are followed. That also relates specifically to the points that the hon. Gentleman made about the current funding of 2.2 million for trials.
	I know that one issue Action Duchenne has lobbied hard on is access to highly specialised services closer to home, and both my hon. Friend and the hon. Gentleman touched on that. Although more than 60,000 people in the UK have a muscular disease or a related condition, that is not a large number compared to the total number who need access to specialist services. Sometimes it is simply not possible to ensure that services with the necessary specialised focus are available close to the patients. It is difficult to see at this time how the level of specialist services that is needed could be provided in every locality. I take the point made by my hon. Friend about the need to share experience and understanding in the service. We should look closely at that.
	In any area, it is for NHS commissioners to commission services that reflect the needs of patients and to be informed by good practice in other health communities. The local involvement networks will play a key role. They will enable a range of people to influence the commissioning and provision of health and social care and to bring real accountability to the system, from commissioning to direct provision. It is important that as part of how we improve services we give a stronger collective voice to patients and local groups associated with specific conditions. They can influence the decision makers to ensure that services are more responsive to their needs.
	The national service framework for long-term conditions sets out the standards of health and social care we expect people with long-term neurological conditions, including DMD, to receive from diagnosis to end-of-life care. The quality of care that people with neuromuscular conditions receive will be raised across the country as a result of the publication on Monday of High Quality Care for All. Lord Darzi's report sets a new foundation for a health service that empowers staff and gives patients choice. It will ensure that health care is personalised and fair, that it includes the most effective treatments within a safe system, and that it helps patients to maintain a good quality of life.
	The report will give patients more say through initiatives such as care plans for those with long-term conditions, a guarantee that the most effective drugs will be available to all and the provision of the right to chose care providers, including GPs. Personal budgets will be piloted for 5,000 patients with complex conditions.
	I welcome the debate and I know that the hon. Member for Ribble Valley and my hon. Friend the Member for Blaydon understand the complexities and challenges. I share their desire to see that people living with DMD receive the services and treatment that they need and deserve and I can assure them that the Government will continue to provide support and encouragement to ensure that that happens. I would be more than delighted to meet the hon. Gentleman and my hon. Friend together with a delegationthey both referred to a small delegationto continue the discussions on the issues that they have both so eloquently identified this evening. I congratulate them both on raising this important subject.
	 Question put and agreed to.
	 Adjourned accordingly at thirteen minutes past Nine o'clock.